NEW YORK, Oct. 15 (UPI) -- The falling price of oil is affecting Russia's economy more severely than economic sanctions and could be a long-term trend, analysts say.
Russia is heavily dependent on oil as an export, and prices have fallen from above $100 per barrel in March to about $81 per barrel Wednesday, the lowest price level in three years.
Spurred by an increase in oil production, largely in the North American shale oil industry, and an economic downtown in Europe and Asia, the price of a gallon of gas in the United States is falling, but it indicates trouble for oil exporters such as Russia and Iran.
"We're probably getting closer to the point of pain," energy analyst Phil Flynn at the Price Futures Group told CNN of the Russian economy. "It's definitely putting the squeeze on their balance sheet."
Russia's stock market, the Micex, has fallen 6 percent in the past 90 days, and the ruble is down 20 percent against the U.S. dollar for 2014. A World Bank forecast expects the Russian economy to grow by only 0.5 percent in 2014, and 0.3 percent in 2015, and some suggest the trend will continue as global technologies that use less petroleum are adopted.
The current price drop is also affecting Iran for similar reasons. Iranian President Hassan Rouhani promised voters the country's economy would grow, despite sanctions, and the oil oversupply "is very bad news for them," Virginia Tech University economist Djavad Salehi-Isfahani said.
A drop in oil prices in the mid-1980s led in part to the collapse of Soviet Communism, and Russian President Vladimir Putin's installation of a more autocratic Russia coincided with a rise in energy prices at the end of the first decade of the 21st century. The current slide, coupled with economic sanctions, suggests Russia cannot proceed with Putin's military plans.
The Russian news agency Itar-Tass said in September Russian military spending would rise by 21 percent by 2015. Weeks later Russian Finance minister Anton Siluanov admitted the country could not afford the planned agenda.