On Thursday experts indicated that Russia is now headed towards a major economic crisis, following news that the price of oil had fallen below $50 a barrel. The collapse of the value of oil is said to have several catastraphoic consequences for Russia, including a severe drop in living standards next year and a possible devaluation of the rouble.

Russian prime minister Vladimir Putin insisted that the country's economy was still robust. Speaking at a meeting of the pro-Kremlin United Russia Party, Putin told delegates in Moscow that Russia would survive the current global financial crisis, which he blamed on the United States.

The Kremlin, however, is aware that any loss of confidence in the Russian economy would also lead to a loss in confidence in Putin and Russian president Dmitry Medvedev.

Putin said that his administration would do everything possible to prevent a recurrence of Russia's last oil-related financial crash in 1998, however the continually dropping price of oil leaves him few available options. Experts now suggest that Russia's economy is facing profound difficulities, despite two massive stabilization funds accumulated during the booming oil years.

The fall in oil prices from $147 in July to below $50 this week has blown a hole in the government's budget calculations, and is now facing a $150 billion shortfall in spending plans. They will have to slash expenditures in 2009 as a result.

Putin assured Russians that their social benefits would not be affected, promising a $20 billion assistance package. "We will do everything, everything in our power ... so that the collapses of the past years should never be repeated," he said.

The oil slump however, has only worsened the already severe economic problems in Russian. Since May, Russian Markets have lost 70% of their value. Russian's top bank has spent $57.5 billion in two months attempting to prop up the currency.

Chris Weafer, an analyst with the Moscow brokerage Uralsib, said:

If the current trend continues with the government supporting the rouble, oil prices falling and a slowing economy we are going to have a major crisis. There will be more pressure on the rouble and an extremely difficult first quarter next year."

He added that Russia is more vulnerable than other countries because it is an oil state that failed to diversify its economy.

Putin and Medvedev have blamed the United States and the Bush administration for the current global financial mess. Russian state-controlled TV has also sought to portray the crisis as an American problem.