The crude oil prices have been plummeting steadily over the past 8 months, owing primarily to oversupply in the market. This oversupply of crude oil was met with a reduced demand from China, Japan and Europe, thus taking a toll on the crude oil producing nations. In the war between OPEC and US over the market share, there are nations that are on the verge of exiting from the competition. Russia, for which energy exports account for nearly 70% of its export revenue, is one such nation to be adversely affected. Its marred political relations with its neighboring nations add to its woes. These dynamics have forced Russia to explore the unprecedented ties with China and India to substitute the client base it once held in Europe.

Introduction
Oil is the largest internationally traded commodity both by volume and value and hence, its price is critical to the world’s economy. From 2010 till mid-2014, world oil prices were stable at USD110 a barrel. But since June 2014, prices have seen a sharp decline, with Brent having dipped below USD 45 a barrel. The reasons for this are twofold.

• Mute demand from China and Japan due to slag in the economic growth
  Surge in the US production

Historically, Saudi Arabia has been the market leader in crude oil production. But horizontal drilling and hydraulic fracturing in underground shale rock has boosted US output by 66% over the past five years. With this surging crude oil production, US have not only been able to suffice its domestic need but also have become the competing crude oil exporter. In an attempt to hasten cutbacks by US shale drillers so as to retain their market leadership, OPEC have stood by the decision to not to cut their production, thus resulting in declining crude oil price. The dormant demand due to slag in economic growth in China and Japan has compounded the repercussion of this decline in price.

In the current scenario, where all the financial markets are interconnected, no country can seal off its economy from the ripple effects of falling crude prices. However, the impact of the same is not equal on all the crude oil producing nations. It majorly depends upon the cost of extraction. Countries with costly oil extraction could suffer from potential sovereign bankruptcy.