However, it will be hard pressed to maintain this level of output amid the oil price collapse, and the financial and trade sanctions imposed on Moscow by the US and its Western allies, said Deputy Prime Minister Arkady Dvorkovich.

Speaking at the World Economic Forum in Davos, Switzerland last month, he said Russian oil production could fall by as much as one million b/d if oil prices remained weak and the industry is unable to make new investments to protect existing fields and find new reserves.

The Russian economy has been hard hit by the combined impacts of Western sanctions and the oil price collapse. After expanding by more than 4.2% in 2012, the economy is likely to have plunged into recession from the second half of last year.

Last month, two US ratings agencies downgraded Russia’s credit to junk status that will further make it harder and costlier for the country to borrow from foreign lenders. Standard & Poor’s rated Russia’s credit as junk while Fitch Ratings downgraded the country’s long-term foreign and local currency default ratings (IDR) to BBB-from BBB while giving it a long-term negative outlook.

“The economic outlook has deteriorated significantly since mid-2014 following sharp falls in the oil price and the rouble, coupled with a steep rise in interest rates,” said Fitch.

“Western sanctions first imposed in March 2014 continue to weigh on the economy by blocking Russian banks’ and corporates’ access to external capital markets.”

The agency expects the Russian economy, which grew by 0.6% last year, to contract by 4% in 2015, with growth expected to return only in 2017.

Fitch warned that if oil prices remained below US$70 per barrel, the Russian economy could plunge into a deeper recession in 2015 and suffer further strain on public finances.

Russia’s Central Bank has reported that capital flight from the country hit a record US$152 billion last year after averaging US$57 billion annually between 2009 and 2013. The nation’s foreign exchange reserves have crashed below US$380 billion, down more than  20% from a year ago while the Russian ruble has plunged from around 33 to the US dollar last June to 70 recently.

Relations between Russia and the West have plummeted to their lowest levels since the Cold War. Hostilities are being revived amid their growing rivalry over Ukraine and the Middle East.

Russian business leaders are worried that their nation’s economy could collapse with devastating impact on Europe and the world if the two sides continue with their path of confrontation.