Oil and Gas

The signal to watch for an OPEC cut: RBC’s Croft

Saudi's oil balancing act

Oil prices turned lower Tuesday after streaking higher on the back of the commodity's best three-day rally in 25 years.

But just how open OPEC actually is to discuss production cuts with other producers could decide whether or not oil continues to rally higher, according to RBC Capital Markets Chief Commodity Strategist Helima Croft.

"OPEC officials, Saudi officials have been saying since November they've been reaching out to the Russians to see if they could get a coordinated cut," she told CNBC's "Squawk on the Street" in an interview Tuesday. "Thus far Russia has turned them down, so I'm looking to whether there is any change in Moscow to whether there is going to be a change in OPEC's position."

Workers drill at the Saudi Aramco oil field complex facilities at Shaybah, Saudi Arabia.
Reza | Getty Images

Croft echoed the sentiment shared by other insiders in reaction to commentary in Monday's OPEC Bulletin, a magazine issued by OPEC's Vienna headquarters, saying "this was not a new story." A the publishing reflected a genuine concern for slipping prices but didn't signal a pending policy change.

Nonetheless, it wouldn't be the first time OPEC has coordinated production moves with a non-member country, and with Russia becoming China's largest oil supplier earlier this year a coordinated cut with OPEC could have huge price ramifications.

For Saudi Arabia, which has long-experienced the pain of low oil prices, cutting production would be more palatable if the country could avoid losing market share to Russia, Croft said.

Read More Saudi Arabia hangs on with cheap oil—but for how long?

"The Saudis are basically saying we're not going to do this alone—Russia, you better join us because you're not going to eat our market share if we cut alone," she said.

While others question why OPEC would be more inclined to agree to a production cut since one hasn't been reached thus far even as oil slipped below $39, Croft highlighted a shift in OPEC sentiment.

"They believed the demand-driven recovery would pull us into the $70s comfortably this year," she said. "So if you're looking at a situation where $75 by mid-2016 looks like a mirage, then you have to go back to your books and say, 'Do we have to cut deeper?' "