The MICEX, meanwhile, halted trading at 14:10 after losing 14.24 percent, closing at 513.62.  The two indexes have lost over half their value in the past month alone.  Both will resume trading on Tuesday, October 28th.

The Russian collapse comes in line with falling share prices in Europe, although the reaction in Russia has been much more severe.  Fears of a global recession and oil prices at a 16 month low have made many investors fearful about the state of Russia’s oil and gas-rich economy.  On Thursday, the Standard & Poor’s rating agency lowered Russia’s long-term outlook to “negative” from “stable.”

Crude oil was trading at $63 per barrel on the New York exchange Friday.  This posed a serious problem for Russia’s 2009 budget, which will go into deficit below a price of $70 per barrel.

To combat sinking prices, the OPEC cartel announced today that it would cut production by 1.5 million barrels per day.  Unfortunately, many investors do not believe the move will be enough to counteract shrinking worldwide demand, and the cut did not have an immediate effect on markets.

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Note: Many ordinary Russians do not invest in the stock market, and have not been affected by the market crash.  The global liquidity crisis, however, is beginning to spill over into the real Russian economy, and falling government revenue may ultimately create tangible consequences in government programs, pensions and other essential services.

The 70 dollar mark is significant for the Russian government, which relies heavily on tax revenues from oil and gas extraction.  In September, Deputy Prime Minister and Minister of Finance Alexei Kudrin made the public announcement that Russia’s 2009 budget would enter a deficit if oil prices sank below 70 dollars per barrel.

“70 per barrel is the price of a balanced federal budget for 2009,” Kudrin had said, noting that the budget was formed with that price in mind.  “That being said,” he went on, “the budget forecast for the average cost of oil in 2009 equals 95 dollars per barrel.”

Analysts said that the dropping oil price was related to three major issues: slowing economic growth connected with a global recession, a growing difficulty in obtaining credit, and increased production outputs from non-OPEC member countries.

The inter day drop may also relate to a Nigerian court decision, which mandates that Royal Dutch Shell hand over control of a major oil terminal to the local population.

OPEC, meanwhile, may lower their daily production output in response to the falling prices.

“It will be one million [barrels], or more,” Qatari Oil Minister Abdullah al-Attiyah told the al- Jazeera television channel. “Prices have fallen a lot and we need to take measures.”