Oil traders eagerly anticipating an extension of the current OPEC-led production cut could be left sorely disappointed this week, according market analysts including RBC Capital Market's Helima Croft. OPEC oil ministers will be in Vienna Thursday and there is widespread expectation that members will decide to extend oil output cuts beyond a deadline of March 2018, a move that has helped to stabilize prices. However, there is some anxiety that the biggest non-OPEC producer that also signed up to the output cut, Russia, could pull out of an extension, sending markets sharply lower. Croft, the global head of commodity strategy at RBC, told CNBC that Russia — or specifically Russian President Vladimir Putin — was the wildcard that could disappoint markets. "We still think the most likely outcome is to extend through 2018 because that was a Putin plan," Croft said Tuesday. "It was Vladimir Putin who raised the issue of a full-year extension in October but since then a number of his corporates have said 'we're not so excited about that and we want to exit on schedule' so the end of (the first quarter of 2018)," Croft added. OPEC appeared to take Putin's comments to heart with the cartel's Secretary General Mohammad Barkindo saying in October that Saudi Arabia and Russia's energy minister were taking their "cue" from Putin when discussing a possible extension to the end of 2018.

But, Helima Croft noted that Putin had led the market on with talk of a full-year extension, saying it could disappoint traders if Russia decided to break up its oil pact with Saudi Arabia. "Before he (Putin) said that no one was thinking about a full-year extension and then OPEC went to work on a full-year extension so now that is the market expectation. So we're set for a disappointment if Russia doesn't show up for the 'bromance' (with Saudi Arabia) anymore," she said.

'Mission accomplished'

The price of oil collapsed from near $120 a barrel in June 2014 due to weak demand, a strong dollar and booming U.S. shale production. OPEC's reluctance to cut output was also seen as a key reason behind the fall. But, the oil cartel soon moved to curb production — along with other oil-producing nations — in late 2016. The exporters reached the current deal last November and have already extended the agreement once through March 2018. Now, oil markets are already showing jitters over the OPEC meeting this week, which will be attended by Russia. Oil prices slipped on Monday night amid the uncertainty and on Tuesday morning, a barrel of U.S. West Texas Intermediate (WTI) for January delivery was fetching $57.75 and a barrel of benchmark Brent crude was $63.62.

Putin is under pressure at home to not overdo the extension of output cuts, with a number of Russia's largest oil companies reportedly showing displeasure at a possible extension to the current deadline of March 2018. There are also differing budgetary needs between Russia and its OPEC ally Saudi Arabia that Putin has to consider. While Russia is basing its 2018 budget on an oil price of $40 a barrel, OPEC's de facto leader Saudi Arabia needs a higher price per barrel to break-even, requiring $70 a barrel in 2018, according to the International Monetary Fund (IMF), and as such sees cutting for longer as a way to achieve this. The 1.8 million barrels a day cut has been widely credited with setting oil markets on a path towards rebalancing, helping to balance the global supply of oil so that it matches demand, and helping to raise prices as a result. "The Russians are essentially saying 'mission accomplished'," Helima Croft said. "They're saying that prices are where they want them and if we continue the cuts longer then all you're going to do is give a lifeline to U.S. shale oil producers. Also Russian corporates have lower breakevens so from their standpoint, they are profitable in this price environment and they don't want to forego future projects and they basically want to exit on schedule," she said.