Russia is one of the largest oil producing nations in the world. The falling price of crude has clearly hurt its economy, but the country has seemed willing to let OPEC try to set the price of oil by controlling its member nations' production levels. The cartel has failed to improve the value of a barrel of oil, which still sits below $50, well down from its peak last summer of $147.
A number of OPEC nations, especially Iran and Venezuela, say that they cannot effectively run their economies unless oil is over $70. Saudi Arabia, the largest producer in the cartel, has ignored those pleas. It may be gambling that moving prices above where they are now could deepen the already dangerous recession that has gripped the global economy.
Russia may be getting fed up with having its economic fate determined by other nations. According to The Wall Street Journal, the most senior government official with responsibility for energy policy said, "Russia wants to keep oil prices between $60 and $100 a barrel." The country seems to be prepared to cut production and increase its reserves in the hopes of helping to force the price of crude higher.
Can Russia succeed where OPEC has failed? That depends on how much short-term pain it is willing to endure. If it takes a large amount of its supply off the market, it is likely that crude prices will face upward pressure. In the meantime, oil revenue into Russia could be worse than it is today.
Douglas A. McIntyre is an editor at 24/7 Wall St.