Russia does not face an immediate threat from the sharp fall in oil prices over recent months. While the economy is heavily dependent on oil, the country’s accumulated reserves and the floating rouble will mitigate the shock, and Russia should be able to withstand levels of $80 to $90 a barrel for about two years. But in the longer term, persistently low prices – reinforced by the pressure imposed by western sanctions – could pose an existential challenge to Vladimir Putin’s regime.

The 25 per cent drop in the oil price over the past three months did come as a shock to the Russian government. The latest draft of the 2015-17 budget assumes a price of $100 a barrel (and average annual gross domestic product growth of 2.6 per cent). Even before the oil price shift, the government planned to deplete its Reserve Fund from 5 per cent of GDP to 3 per cent by the end of 2017, in order to pay for the deficit foreseen in each of the next three years. Much of Russia’s other sovereign fund, the National Welfare Fund, has already been committed to infrastructure and providing support to the banks and companies sanctioned by the west.

Oil and gas account for about half of government revenues in Russia; a price drop from $100 to $80 a barrel would cause a shortfall of about 2 per cent of GDP. Normally this would not be a great problem, as Russia would borrow in international markets, and Russian state-owned banks and companies would refinance their external debt.