For years, Canada’s oil and gas sector was plagued by pipeline shortages that severely limited the country’s capacity for export and forced producers to sell at a major discount as storage capacity became maxed out across the nation. But all of that changed when the Trans Mountain Expansion project finally came online after years of delays on May 1, 2024. Now, suddenly, Canada is a major competitor in global markets, with the ability to ship crude directly from Vancouver to Asian ports. The resulting trade boom reflects a monumental shift in global geopolitics. As of 2019, the lack of transport capacity was costing Canadian producers an estimated $20.62 billion annually. But since the commercial opening of the Trans Mountain Expansion pipeline last year, oil producers in the central province of Alberta can now send three times more crude oil to the Canadian Pacific coast. This amounts to nearly 600,000 barrels per day (bpd) of additional market access and has almost single-handedly revitalized the sector after years of struggle.
Highlighting how meaningful this new trade route is for global markets, the Baltic Exchange - a global leader in maritime market data tracking - has introduced not one, but two new benchmarks aimed solely at tracking Canadian crude exports to Asia. As of October 13, you can now track shipments from Vancouver to Ningbo, China, and from Vancouver to the Pacific Area Lightering zone off the US West Coast using Aframax tanker benchmarks TD28 and TD29, respectively. The benchmarks are listed on the Intercontinental Exchange.
“This is a classic example of the Baltic responding directly to market needs,” Matt Cox, Head of Benchmark Production at the Baltic Exchange, was recently quoted by flagship maritime and offshore news outlet gCaptain. “The development of these new routes reflects how trade flows evolve in response to geopolitical realities, from tariff disputes and shifting alliances to sanctions and changing energy security priorities. Our role is to ensure the market has reliable benchmarks that reflect these new dynamics.”
This development reflects critical changes and tensions in global politics as China, the world’s largest importer of fossil fuels, and the United States, one of the world’s biggest exporters of natural gas and a top oil exporter, continue to accelerate a globally impactful trade war. While the Trump administration has continued to slap tariffs on Chinese goods amid ongoing threats to push them higher, China has introduced retaliatory port fees on U.S. vessels, increasing costs to ship oil and gas from the U.S. to China.
Related: U.S. Oil Growth Shifts from Shale to Gulf
As the globe’s two biggest economies continue to tiff, alternative trade partnerships aren’t hesitating to step into that lucrative vacuum. Canada has made no bones about its plans of ramping up its oil and gas exports as U.S. policy has left openings in the market – first under the Biden administration’s liquefied natural gas export pause, and now under Trump’s nationalistic trade approach. As a result of these geopolitical shifts, in addition to its newfound export capacity thanks to the Trans Mountain Expansion, Canada is an increasingly key player in global oil and gas markets.
“China’s appetite for Canadian oil is headed for all-time high,” blared a Bloomberg headline from this week. The report goes on to detail that over 70 percent of oil tankers departing from British Columbia have headed straight to China. The result is a win-win for Canada and China, as Beijing continues to fill its strategic reserves as it pivots away from trade with the United States, and Canada has seen its strongest crude prices since July, when prices are traditionally stronger.
Not everyone in Canada, however, is in support of the country’s newfound dominance in global fossil fuel trades. The country is increasingly divided on climate issues, and new Prime Minister Mark Carney has to walk a tightrope between strengthening Canada’s economy in the face of increasing hostility from its ally to the South, while also holding true to climate goals that Canada has, so far, not lived up to. In the first months of his term, Carney has plunged full speed ahead into global oil and gas markets, putting Canada on the map and in the maritime benchmarks, while also trying to maintain an eco-friendly image. “We are not abandoning our climate goals,” he has stated. “We are recalibrating our tools to support Canadian families and businesses through a difficult economic moment.”
By Haley Zaremba for Oilprice.com
China Becomes Canada’s Biggest Crude Customer Thanks to Trans Mountain
By Irina Slav - Oct 20, 2025
For decades, Canadian oil exporters have only had one destination: south of the border. Yet things are changing. There’s a new big buyer in town, and it’s buying a lot: China.
Canadian crude oil flows abroad began to change direction earlier this year, after the trade dispute ignited by U.S. President Trump prompted exporters to seek new markets, conveniently made more easily accessible by the expanded Trans Mountain pipeline.
The pipeline went into operation with its new capacity of 890,000 barrels daily in 2024. Between the launch of the expanded pipe and spring this year, the average flow rates for shipment to China reached 207,000 barrels daily. That compares with an average of 173,000 barrels daily pumped to the United States. Since spring, the shift has become even more marked.
October is on track to see record flows of Canadian oil to China as the latter continues to stockpile on the world’s most traded commodity amid expectations of a glut that has pushed prices lower internationally. Bloomberg reported the trend, citing data from Vortexa showing that as much as 70% of oil cargoes departing British Columbia this month are heading to China. Since the start of October, 5 million barrels have been shipped from Vancouver in total, the data showed. This was an all-time high for the first half of any month.
What’s more, it might actually be more than 70% of the Canadian crude shipped from the coast of British Columbia that is going to China. Per Bloomberg, the remainder of the cargoes were carried to the West Coast, off Los Angeles, where the oil is normally transferred to larger tankers before it is shipped to its final destination, which may well be China.
The world’s largest oil importer has been buying a lot of crude this year, taking advantage of the price decline to stock up for supply security. China has mostly preferred discounted Russian and Iranian crude, but any crude is a bargain this year, it seems, so it has been stocking up on Canadian oil, too.
The average stockpiling rate for the year so far has been estimated at around 990,000 barrels daily. Over the next year or so, this rate may soften to around half a million barrels daily, according to Goldman Sachs. Then again, it might remain strong if prices remain weak—because China is building more oil storage capacity.
This year and next will see a total of 11 new storage sites built across the country, Reuters reported earlier this month, noting that the combined capacity of the new sites would come in at some 169 million barrels. The amount is equal to two weeks’ worth of crude oil imports, Reuters noted in its report. It compares to new oil storage capacity additions of between 180 and 190 million barrels for the period between 2020 and 2024, according to data from Vortexa and Kpler.
Oil prices may be weak overall, but for Canadian crude, the surge in shipments to China prompted a jump earlier this year, with Bloomberg noting in its report on exports that Western Canadian Select is trading at the highest since July, even though the fourth quarter is normally trough season for oil prices.
In this demand context, it is hardly a surprise that earlier this year, forecasters from S&P Global said they expected Canadian oil sands production to hit an all-time high this year, at 3.5 million barrels daily. Not only that, the commodity analysts said in June, but oil sands production would continue to grow steadily, reaching 3.9 million barrels daily by 2030, despite the Canadian federal government’s focus on decarbonisation.
Meanwhile, the Trans Mountain pipeline is expected to reach a capacity utilization rate of 84% this year, which would be up from 77% in 2024, due to high toll rates. Eventually, the utilization rate of the pipeline may reach 92% in 2027, all thanks to demand from Asia, led by China.
Interestingly, even though flows of crude to the United States via the Trans Mountain pipeline have declined, there is now talk to boost overall flows south by resurrecting the Keystone XL project. The news came from the Financial Times last week, with the publication writing that both Canadian and U.S. officials had signaled the restart of Keystone XL was a possibility. “We are open to discussing the advancement of continental energy security, if we also address the irritants for steel and aluminium,” Canada’s energy minister, Tim Hidgson, told the FT.
All these developments suggest that despite doubts about global oil demand, demand is pretty healthy in at least two places, which also happen to be the biggest consumers—even if the consumption is partly driven by stockpiling. It is doubtful if Keystone XL would indeed be resurrected and built, but talk about a further expansion to the Trans Mountain might at some point translate into action.
By Irina Slav for Oilprice.com
