Russia-OPEC Freezing Oil Output Can Help Canadian Energy Producers

The recent deal reached by Russia and three Organization of the Petroleum Exporting Countries (OPEC) on freezing oil production at the January 2016 levels can be helpful for Canadian producers, Canada's Ministry of Natural Resources spokeswoman Cathy Khoury told Sputnik on Wednesday.

WASHINGTON (Sputnik), Anastasia Levchenko — On Tuesday, the energy ministers of Saudi Arabia, Qatar and Venezuela held talks with Russia in the Qatari capital of Doha, and agreed to freeze their oil output in 2016 at the January 11 level. However, Russian Energy Minister Alexander Novak noted the decision is contingent on other oil producers joining the agreement.

"If the freeze in production rates reduces global oil supplies on the market, this will support higher prices and could help to mitigate the pressure currently facing Canadian producers," Khoury said.

The ministry’s spokeswoman added that the global downturn in commodity prices had affected all major producing countries.

"This is producing hardship across Canada, particularly in the oil patch. The Government of Canada is monitoring the economic situation closely," Khoury said.

However, oil and petroleum product prices in Canada are determined by global market forces. Global oil prices plunged from $115 to less than $30 per barrel between June 2014 and January 2016, hitting their lowest levels since 2003, mostly because of prolonged global oversupply and sluggish demand.

The next ministerial meeting of OPEC and non-OPEC countries is set for June 2, where oil producing states are expected to determine oil extraction quotas.