Vladimir Putin was enjoying himself at Russia’s first Grand Prix for a century yesterday, but the party was quickly over as the Russian president woke up to further falls in oil prices and a weakening rouble.
The Russian currency hit record lows against the dollar and the euro on Monday morning, as tumbling oil prices and economic sanctions continue to take their toll on the Russian economy.
The greenback is itself struggling this morning - the dollar has slipped against the euro, Australian dollar and the yen. Yet still the hapless rouble has fallen 0.18 per cent against the US currency, to a new record low of 40.43 roubles per dollar.
The story was the same against the euro and the pound, as the Russian currency hit an all-time low of 51.32 roubles per euro.
Russia’s economy has been badly hurt by falling oil prices that show no signs of improving. This morning Brent crude dropped to a price of $87.74 a barrel, its lowest price since December 2010.
The Russian government has set a “break-even” price of $110 per barrel in order to cover its spending.
Yet that looks an unlikely goal after Saudi Arabia, Opec’s largest oil producer, reportedly admitted that it is prepared to accept oil prices below $90 for an extended period of time.
According to Russian news agency Ria Novosti, Rosneft vice-president Mikhail Leontyev had expected cheaper Saudi prices to be a short-term measure.
EU-imposed sanctions in response to Russia’s role in the Ukraine crisis has also restricted the country’s ability to trade in oil and gas.
Putin and Ukrainian president Petro Poroshenko are due to meet for talks later this week.