Russia’s economy braces for major blow as oil prices shrink

Already heavily affected by Western sanctions since February 2022, Russia is now also grappling with the indirect fallout of international tariffs imposed by Donald Trump.

Elvira Nabiullina, the governor of Russia's central bank, stated last week that the tariffs are being felt primarily through fluctuations in global oil prices — a crucial resource that accounts for nearly one-third of the country’s GDP.

“If such tariff wars — and we are seeing an escalation — continue, they usually lead to a decline in global trade, the global economy, and possibly even the demand for our energy resources. There are risks here, but we need to monitor how the situation evolves,” Nabiullina warned, according to media reports.

Since the outbreak of the war in Ukraine, Russia’s economy has faced mounting challenges, including soaring inflation — currently at 21% — and persistently high interest rates.

These pressures are compounded by escalating military expenditures, even as Moscow and Washington engage in preliminary talks aimed at achieving a temporary ceasefire in Ukraine.

Adding to the strain, the price of crude oil has dropped by $10 per barrel since early April, according to Aura Sabadus, an associate fellow at the Royal United Services Institute (RUSI) and a senior journalist specializing in energy markets.

(QG - Source: Newsweek - Picture : © Unsplash)