- Canadian Oil Exports to China Surge After TMX Expansion.
- U.S. Trade War Drives Shift in Crude Flow Patterns.
- TMX Opens Pacific Route for Alberta’s Landlocked Oil.
China is now the largest buyer of Canadian oil transported through the expanded Trans Mountain (TMX) pipeline, based on ship traffic data, due to a shift in global trade flows and geopolitical tensions driven by U.S. trade policy, reports Reuters.
Canada Looks Beyond U.S. Amid Trade War
U.S. President Donald Trump’s trade war has shaken Washington’s relationship with Ottawa, leading Ottawa to seek to diversify the oil markets it exports to. U.S. sanctions against Russian and Venezuelan crude have also caused Canadian oil to become more appealing to new customers such as China.
In spite of being the fourth-largest oil-producing country in the world, nearly all of Canada’s crude, roughly 90% or 4 million barrels a day, is shipped to the U.S. because of Alberta’s landlocked location and restricted access to tidewater terminals.
TMX Expansion Opens Asian Markets
The C$34 billion ($24.40 billion) TMX is Canada’s sole east-west oil pipeline, extending to the Pacific Coast for export on tankers. Since its expansion began operations on May 1, 2024, capacity doubled to 890,000 barrels per day, opening up access to Asia and the U.S. West Coast.
Chinese Imports Surge
Canada averaged 207,000 barrels per day (bpd) exports to China since the TMX expansion went into full operation during June 2024, a huge increase from merely 7,000 bpd in the period up to 2023, according to Kpler tracking data. The U.S. imported roughly 173,000 bpd from TMX during the same period.
Surprising Buyer Trend Shift
China’s dominant position went against initial projections that the U.S. would be the largest TMX buyer, particularly on the West Coast. Protectionist U.S. trade policies have redirected Chinese interest. “Trump’s protectionist policies have in recent months made Canada more attractive to Chinese buyers,” said Philippe Rheault, director of the China Institute at the University of Alberta.
China’s cautious approach to energy dependence has also played a role. China has also been reluctant to be over-reliant on Russian energy supplies, Rheault said. “A lot of China’s refineries are also mindful of U.S. sanctions, and so have been trying to diversify away from oil from Venezuela and other places,” he added.
Canadian Exports of Oil Outside the U.S. Increase
Canadian crude exports to countries outside of the U.S. increased almost 60% in 2024 to a yearly record of approximately 183,000 bpd, Statistics Canada reports. Other customers are South Korea, Japan, India, Brunei, and Taiwan, shipping data shows.
Pipeline Capacity and Expansion Plans
TMX had an average capacity of 77% in 2024, down a little from its projected 83%, primarily as a result of high tolls to recoup cost overruns during the construction process. It is expected to be at 84% capacity in 2025 and grow to 92% by 2027. Trans Mountain Corp, the operator of the pipeline, is assessing expansion schemes that would bring 200,000 to 300,000 bpd of additional capacity.
Future Flows Likely Headed to Asia
Given current demand trends, experts expect future capacity increases to primarily benefit Asian markets. “I think you’re going to see virtually all of those incremental vessels flow west” for export to China, said Skip York, chief energy strategist with Turner, Mason & Company.
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Source: Reuters
