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Sanctions, oil price hit Russia

November 24, 2014

Russian officials have become more outspoken as to what extent Western sanctions and the steady decline in the price of oil are having on the national economy. Capital outflows were also on the Kremlin's radar.

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Image: Dmitry Kostyukov/AFP/Getty Images

Russian Finance Minister Anton Siluanov said Monday his country was losing around $40 billion (32.2 billion euros) annually due to sanctions imposed by the West over Moscow's involvement in the Ukraine conflict.

Addressing an economic forum in Moscow, the minister added, however, that falling oil prices were the larger evil, with the damage amounting to up to $100 billion euros per year.

"The oil price has fallen 30 percent since the beginning of the year," Siluanov told the audience. "The ruble has also fallen 30 percent. So, however the oil prices behave, the ruble exchange rate will too."

Strategic games

Russia gets about half of its total revenue from oil profits. Energy Minister Alexander Novak had earlier hinted the country was considering cutting its own oil production to shore up prices.

A major producer of crude oil, Russia is not a member of the OPEC cartel, which will discuss whether to scale back its own output.

Finance Minister Siluanov expected Russia to record capital outflows of $130 billion this year as private households and businesses hedged against the falling ruble by converting their savings in the Russian currency to foreign ones.

hg/cjc (Reuters, dpa, AFP)