China Emerges as Leading Buyer of Canadian Crude Amid US Trade Tensions, Trans Mountain Pipeline Data Reveals

By Amanda Stephenson and Arathy Somasekhar

CALGARY/HOUSTON, May 16 (Reuters) – recent ship tracking data reveals that China has become the leading buyer of Canadian oil transported via the expanded Trans mountain pipeline.This shift in crude flow comes in the wake of a trade war initiated by the U.S., which has altered customary export patterns since the pipeline began operations.The surge in Chinese interest is largely influenced by strained relations between Canada and the U.S. under President Trump, alongside sanctions affecting oil from nations like Russia and Venezuela. Although Canada ranks as the fourth-largest oil producer globally, its primary province for production, Alberta, lacks direct access to ocean ports. Consequently, around 90% of Canadian crude—approximately 4 million barrels daily—is sent south to American markets through existing pipelines.

The C$34 billion ($24.40 billion) Trans Mountain pipeline stands out as Canada’s sole east-west conduit for oil, facilitating transport to Pacific Coast ports where it can be loaded onto tankers for international shipping. The recent expansion that commenced on May 1,2024,tripled its capacity to an impressive 890,000 barrels per day and opened doors not just to U.S.West Coast markets but also Asian buyers.

Despite current exemptions from U.S. tariffs on oil imports, Canada is keen on diversifying its export destinations due to previous tariff threats and political tensions with Washington. Since ramping up operations last June following TMX’s expansion completion, shipments to China have averaged about 207,000 barrels per day—an astronomical rise from just around 7,000 bpd over the past decade.

In contrast during this same timeframe; exports heading into the U.S. totaled approximately 173,000 bpd from TMX—a figure that highlights china’s unexpected dominance as a customer when many anticipated American buyers would prevail instead.

Philippe Rheault from the University of alberta’s China Institute notes that Trump’s protectionist stance has made Canadian crude more appealing for Chinese refineries looking beyond Russian supplies due to geopolitical concerns surrounding sanctions against various countries including Venezuela.

As we look at shifting trends in global energy flows post-expansion of TMX: Statistics Canada reports nearly a 60% increase in Canadian crude exports outside North America within a year—reaching record levels at about 183,000 bpd in early-2024—with notable recipients including South Korea and Japan among others.Calls have emerged among Canadian politicians advocating for new pipelines aimed at coastal terminals to lessen reliance on American markets; however regulatory challenges continue stalling such initiatives despite rising demand abroad.

Currently operating at roughly 77% capacity according to filings with Canada’s Energy Regulator—below initial forecasts—the Trans Mountain pipeline aims for an increase up towards full utilization over coming years with potential expansions being considered that could add another notable volume of capacity ranging between 200-300 thousand bpd.

Given China’s growing appetite for stable energy sources amidst fluctuating global dynamics; experts like Skip York predict most additional capacities will likely cater towards Asian markets rather than returning back toward traditional routes into America’s West Coast—a trend suggesting future vessels will predominantly head westward toward China instead.