In March, Russian production hit another new post-Soviet high, Through the first few months of 2015, production has increased fractionally (about 0.37%) from late 2014�Œs level. Exports via the pipeline monopoly Transneft Transneft rose by an even larger amount: roughly 2%.

As an extremely capital-intensive industry, oil production doesn�ft tend to move up and down very suddenly. It�fs expensive to start projects and can be just as expensive to mothball or decomission them. Some, and likely most, of the recent increase in production was due to projects that were put in motion months or even years ago.

Yet Russia�fs recent economic travails, particularly the plunge in its currency, weren�ft entirely irrelevant. According to Bloomberg, due to lower service costs oil producers boosted their drilling by 23%. Since producers get their revenues in dollars but have costs which are denominated in rubles, their operations have gotten significantly cheaper at a stroke. There was also a modest stimulus from some changes to the tax code which marginally reduced export duties.

But if production is up and producers are confident enough in their own future prospects to significantly boost drilling (Bashneft, which was recently nationalized, increased drilling by an insane-sounding 160% over the past few months) what is the problem? Well, as you are no doubt aware, the price of oil went on a little bit of a slide towards the end of 2014. OK that�fs far too understated: the price of oil crashed.

It�fs not exactly PhD level economics, but Russia�fs total oil revenues are a function of its production (which has been going up) and its price (which has been tanking). When you combine Russia�fs output with the price that its oil fetches on the world market, this is what you get: