To understand oil prices and production you must understand the importance of oil in Russia.
The modern oil industry was born in an area known as “The Land of Fire” in the Russian Empire.
Back in 1846, the world’s first modern oil well was drilled on the Apsheron Peninsula near modern-day Baku, Azerbaijan. That was 13 years before Drake drilled Titusville well in the U.S.A.
Called the Bibi-Heybat oil field, it laid the foundation for the newly found “black gold”.
In 1899, Tsar Nicholas was in his first decade of rule over the Russian Empire…
And Azerbaijan (then part of the Russian Empire) led the world in the production of oil that year – producing half of the world’s oil.
Little did Nicholas II understand how oil pricing dynamics would lead to the +300 year rule of his family’s dynasty over the Russian Empire.
By the turn of the 20th Century, the Russian Empire was the world’s largest oil producer. The Russian oil fields in Baku alone were producing 230,000 bopd while all of the U.S. was producing 183,000 bopd.