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Thank you, OPEC

Bloomberg reports that Russia is surpassing Saudi Arabia as the world’s largest oil exporter, as Sechin, Rosneft, and co. are immensely enjoying the price advantage afforded to them by the oil cartel’s production cuts this year.  Very few were expecting this reversal, especially after the Russians appeared at to be cooperative at the last OPEC summit.  This will put more pressure on other governments to jack up production or renegotiate the planned cuts, which will have a softening effect on short term prices (already expect to fall to around $65 a barrel this quarter).

Investors had expected Russian supplies to decline this year after Putin’s deputy, Igor Sechin, told the Organization of Petroleum Exporting Countries in December that his government was ready to limit production to support prices. Instead, the country is providing tax breaks for new fields in Siberia. OAO Rosneft, OAO Lukoil and BP Plc’s Russian venture TNK-BP pumped more as prices rose 54 percent to near $69 a barrel.

“In no uncertain terms, Russia has been the biggest beneficiary of OPEC’s sacrifice,” said Chris Weafer, chief strategist at UralSib Financial Corp., in an interview in Moscow. “Higher prices have equaled a $20 billion tax windfall.”