Russia's economy spirals as stock market slides, oil refineries are hit and banks face crisis

The Moscow Exchange (MOEX) index has fallen about 23% year‑to‑date, with a 9% drop in July, marking the longest 17‑week losing streak since 1997 and the lowest level since the start of the Ukraine war in February 2022. Analysts say the Kremlin is shifting focus from market growth to fiscal stabilization, extending debt write‑offs that total 277 billion RUB by 2026 under a programme slated to forgive roughly 1.1 trillion RUB for 74 regions.

Ukrainian drone attacks have targeted Russian oil infrastructure, igniting fires at the Ilsky refinery in Krasnodar and storage sites in Rostov, and hitting eight of the ten largest refineries. The Omsk refinery halted production on 7 July, and daily oil processing fell to its lowest level in 21 years—under four million barrels per day. Consequently, oil and gas revenues plunged 45% in the first quarter of 2026, while the assumed oil price for budgeting dropped from $59 to about $41 per barrel.

Tight monetary policy has driven the central‑bank policy rate high, cutting investment by roughly 14% in Q1 2026 and suppressing consumer spending. Inflation has surged, especially for fuel and staple foods, leaving about 31% of the population struggling to afford essentials. A recent report warns that half a million Russians have declared personal bankruptcy, raising the spectre of a banking crisis.