Russian oil production decreased for the first time in 10 years according to Vedomosti, a Russian newspaper.  The decrease was only 0.7%, while exports were reduced more dramatically year over year, down 6.2%.

The fall in Russian production may be a major turning point in worldwide crude oil production.  While OPEC nations like top producer Saudi Arabia get the attention of most speculators, it is important to note that Russia is the second largest crude oil producer and exporter in the world.  In fact, by itself, Russia almost matches the total exports of the third, fourth and fifth top exporting nations combined (Norway, Iran and the United Arab Emirates).

If Russian oil production has indeed peaked, it leaves the world with only three major exporters that are still supposedly able to continue to increase production: Saudi Arabia, Kuwait and Iraq.  Given the massive oil consumption needs of the United States, that leaves America in a particularly vulnerable position at a time when the United States is facing a financial crisis.

Most foreign policy experts would agree that the United States has little threat from the Saudi Arabian government, given a massive military presence there and throughout the Arab world today.  However, the Iranian issue is becoming particularly complex with today's economic shift.  If Israel were to attack Iran, the Iranians could attempt to disrupt oil exports flowing through the Persian Gulf.  If that were to happen, it would likely create an all out war, with the oil markets reacting in an unprecedented way.

A study of supply and demand of crude oil in the last 30 years reveals an increasingly demand heavy situation, according to the U.S. Energy Information Administration.  Production is up 23% in those years while consumption is up almost 40%, with the United States consuming more than the next top five consuming nations combined (China, Japan, Russia, Germany, and India).

Knowledge of this threat is probably why the Iranians have been so loud and uncooperative on the world stage when it comes to their nuclear 'rights' issue.  An attack from the United States and the possibility of a prolonged battle in the mountains of Iran would create a potential situation where oil disruptions just from Iran itself would create soaring crude oil prices at a time when the United States cannot afford it.  It is no wonder then that reports have surfaced that the United States is actually trying to stop Israel from attacking Iranian nuclear installations, while the Iranian president continues to taunt the Israeli government.

That gives some remaining oil speculators reason to continue betting on oil.  Israel may still act alone and without the green light of the United States.  Today, what was once a likely case has increasingly become a nightmare scenario for government officials looking to restore a broken economy - a broken economy that is now suddenly depending on cheaper oil.

If oil production has really peaked for the second largest exporter in the world, it's time to pay close attention to production capabilities in Saudi Arabia, Iraq and Kuwait.  Tensions in the Middle East may just be a trigger to a greater looming problem.  Oil production will decrease at some point and will impact the price of the commodity.  The question is when.