HOW THE UR USED IRAN AGAINST PUTIN:

For an economy that lives and dies by crude prices, the latest downturn in the world oil market means Russia's recession may stretch into next year for the longest slump in two decades.

Russia's first economic slump since 2009 looked like it would plateau as oil gained 40 percent from a six-month low in January. Crude's recovery has faltered in recent weeks, raising questions about government assurances that the economy will return to growth in 2016 and further squeezing a budget already on course for its widest deficit in five years. [...]

Reeling from a currency collapse last year and sanctions over Ukraine, the government has already cut budget outlays by 10 percent and dipped into one of its sovereign wealth funds, the Reserve Fund, to help cover the shortfall. Lower oil prices mean that Russia may potentially need financing from its other wealth fund, the National Wellbeing Fund, according to Polevoy.

The most severe stress test conducted by the central bank, which assumed oil at $40 and an economic slump of 7 percent, found that 187 lenders may face a capital shortage of 0.6 trillion rubles ($11 billion) while the share of non-performing loans more than doubles to 17.7 percent. The economy will contract for a third year in 2017 if oil remains at $40, the central bank said in June.

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