Russia could be the key to unlocking production cuts from top oil exporter Saudi Arabia, Nasdaq energy analyst Tamar Essner said Friday.
Saudi Arabia has held oil output steady to maintain market share and force U.S. producers to balance oversupply during a 16-month bear market. The kingdom has ruled out any production cut, which would support oil prices, without buy-in from non-OPEC members.
"The real wild card here is what Russia does, and Russia is probably the one country where if they said, 'We are willing to do a joint production cutback with you,' Saudi Arabia could be incentivized to switch course on their refusal to cut," she told CNBC's "Squawk on the Street."
To be sure, Russian Deputy Prime Minister Arkady Dvorkovich told CNBC on Friday that his nation is not ready to cut production.
Essner acknowledged those comments, but said, "I think it depends on how long oil prices stay low, but that is something that is definitely possible."
Russia is the world's third largest oil producer. It is not a member of the Organization of the Petroleum Exporting Countries.
Oil and natural gas sales accounted for 68 percent of Russia's total export revenue in 2013, according to the U.S. Energy Information Administration. That same year, 50 percent of the country's federal budget was derived from taxes on mineral extraction and export customs duties on energy products.
The critical question that will determine a rebalancing is not whether oil markets have bottomed, said Essner, but how long prices will stay below the $55 to $60 range. She contends that even at those prices, too much supply will come onto the market, resulting in a deferral of any sustainable rebalancing.
Essner expects that trend to hold at least through next year. "I don't think we start to see a recovery until 2017 because there's too much supply coming to market, and we're not seeing that pare back in a sufficient capacity yet."