Russia's economy is facing a dramatic meltdown, with £23.7 billion wiped off Moscow's markets in the wake of an unprecedented economic storm. Kyrylo Shevchenko, former Governor of Ukraine’s National Bank, highlighted the scale of the crisis, which he said had “hammered” Russian firms despite the country being exempt from Donald Trump’s tariffs.

The Moscow Exchange plummeted by 8.5% in just 48 hours, marking the worst crash in 18 years. The sharp decline follows a series of devastating blows to Russia’s economy, including falling oil prices, escalating global tensions, and the imposition of US tariffs. Oil prices alone have dropped by 15% over the last four trading sessions, as Brent crude futures fell to $63.97 per barrel.

For Russia, whose budget is heavily reliant on oil and gas revenues, this dramatic fall is a crushing blow.

The price of Urals oil, Russia's main export, has sunk to just $53 per barrel, well below the $69.70 per barrel projected in the 2025 budget.

Mr Shevchenko, posting on X, said: "Triggered by Trump’s tariffs and falling oil, the sell-off hammered Russia’s top firms, despite the fact that the tariffs don’t even apply to Russia.

"With crude slipping and revenues shrinking, the Kremlin may find markets harder to manage than war narratives."

The Kremlin’s efforts to shield the economy from external shocks are failing, and the consequences are being felt immediately.

Oil and natural gas revenues make up a third of the Kremlin’s federal budget, and the sharp drop in prices threatens to derail military spending, which has risen by 25% this year to the highest levels since the Cold War.

With the economy now in freefall, Russia’s financial future is uncertain as the government scrambles to contain the fallout.

Compounding the issue is the struggling ruble, which, despite strengthening slightly in recent months, remains vulnerable in the face of plummeting oil prices.

As the ruble rises, it adds additional strain to Russia’s oil export revenues, further exacerbating the country’s fiscal shortfall.

Central Bank of Russia officials had previously warned that a prolonged decline in oil prices could severely affect budget revenues and force the Government to revise its financial outlook for 2025.

With Russia's oil price dropping to its lowest levels since June 2023, the financial situation has become increasingly untenable.

Russia's inflation is expected to exceed the 4.5% forecast for 2025, with the Economic Development Ministry planning to revise its expectations by March-April, Minister Maksim Reshetnikov said.