Headlines mounted last week that OPEC and Russia could agree to collectively pull barrels from the market to support crude prices, and RBC Capital Markets says it has seen signs Russia could be softening its line, with its energy minister reported to have said that Saudi Arabia had floated an offer for a 5% cut.
He also reportedly said Russia could engage in discussion, despite that "there are lots of questions about the oversight of the cuts".
Russia's Lukoil vice president also said last week he would be open to restricting supply in cooperation with OPEC, stating that he would rather sell "one barrel of oil at $US50 than two at $30".
This marked the first time since oil prices started falling 18 months ago that one of Russia's major producers had signalled a willingness to cooperate with OPEC so publicly.
Russian news agencies last week quoted pipeline monopoly Transeft's head Nikolai Tokarev as saying oil executives and government officials had agreed that talks with OPEC were needed to boost low oil prices and so support the Russian economy.
"At the meeting there was discussion in particular about the oil price and what steps we should take collectively to change the situation for the better, including negotiations within the framework of OPEC as a whole, and bilaterally," Tokarev said.
"The main initiative is being shown by, of course, our Saudi partners. They are the main negotiators. That means that they are the ones we need to discuss this with first of all."
He said output cuts were "one of the levers or mechanisms that would allow us to in some way balance the oil price".
Putin recently discussed a host of security and economic issues in a series of bilateral meetings with the Saudi deputy crown prince and de facto ruler, Mohammad bin Salman, even signing a $US10 billion economic agreement last year, with Saudi Arabia also expressing interest in buying Russian weapons.
Though the two countries are on opposite sides of the Syrian conflict, the Financial Times and Bloomberghave both said Putin is open to Syrian president Bashar al-Assad stepping down, a key Saudi demand.
RBC believes that there is an existing dialogue channel that could be used to coordinate joint action on oil production.
"The deteriorating economic conditions could be a compelling reason for a Russian U-turn," RBC said.
Already suffering under the weight of international sanctions, the Russian economy contracted by 3.7% in 2015, according to the Russian Federal Statistics Service, and there are reports that economic protests are starting to break out in the country.
Putin reportedly based his 2016 budget on $US50/bbl and publicly promised better economic fortunes in the New Year in a December speech, as he would undoubtedly like to avoid any revival of the 2008 protests in Moscow and other major cities.
However, RBC said that even if conditions seem to signal a more active policy debate in Moscow, the historical record on Russia-OPEC cooperation is "a bit mixed".
In 1986, they did in fact pull barrels with then foreign ministry spokesperson Gennadi Gerasimov quoted as saying, "we are an oil exporter and we are interested in stabilising prices so we have cut back our exports … As a result of our talks with the Saudi minister, we are cutting back our oil exports a little further", according to the New York Times.
However, in 1998 they merely promised to join the cartel in a cut, but did not deliver.
RBC also warned that allocating a production cut among countries not operated by a national oil company would be a tough ask, and that compliance records have been decidedly mixed in the past.
"While not our base case scenario, an underhanded way that Putin can score the biggest bang for his buck while not alienating his oil patch allies would be to rhetorically agree to a coordinated cut to feed the media headline, while negotiating with domestic companies to simply let decline rates run their course - versus physically shutting barrels in," RBC said.
"We have called Russia and the rest of the Former Soviet Union the single biggest swing factor for oil prices in 2016, and the cracks are certainly beginning to show."
