The oil industry is one of the most profitable industries worldwide. There is a global market for oil, with nearly every country using oil for fuel and other purposes. The price of oil just hit a five year low ($66.19 per barrel) as OPEC raises the stakes in its price war with the United States. However, the U.S. is not the only country feeling the effects of OPEC’s pricing strategy. Russia’s economy is taking serious hits from the decision as oil is the top export (approximately 58% of total exports) for the country. Russia, which extracts a majority of its oil in Siberia, has significantly higher production costs than OPEC countries and the U.S. As a result, Russia is not able to price competitively in the market, which will result in a large decrease in its oil exports and consequently its profits. Firms in the U.S. have already made cuts on expenditures for next year, including Conoco, which cut spending by $3 billion. Following our Bertrand model, we can expect oil prices to continue to decline. In fact, Morgan Stanley has warned that the price of oil could drop to $43 a barrel in 2015. Nonetheless, the price war is a win for consumers, who benefit from lower prices. Additionally, the lower oil prices are restoring some semblance of confidence in the economy for many Americans.