U.S.-Canada Trade Strains Alter Trans Mountain Oil Flows

Crude flows from the expanded Trans Mountain pipeline have materially shifted since the relations between the United States and Canada soured under U.S. President Donald Trump.

China has now become the biggest buyer of Canadian crude shipped via the Trans Mountain Expansion pipeline to Canada’s West Coast, according to data from Kpler cited by Reuters. 

Last year, the Trans Mountain pipeline finally completed its expansion – after years of delays – and tripled the capacity of the original pipeline to 890,000 barrels per day (bpd) from 300,000 bpd to carry crude from Alberta’s oil sands to British Columbia’s coast. 

The expanded pipeline provides increased transportation capacity for Canadian producers to get their oil out of Alberta and into the Pacific Coast and then to the U.S. West Coast or Asian markets.

The only east-west crude pipeline in Canada was largely expected to ship a large part of the crude to refiners on the U.S. West Coast. 

However, President Trump’s trade blitz and threats to Canada’s sovereignty prompted Canada to diversify its crude oil exports and seek to reduce its over-reliance on the U.S. export market, which accounts for more than 90% of Canadian crude exports. 

So, the crude shipped on the expanded the Trans Mountain pipeline to Canada’s Pacific coast is now finding buyers in China, which wants to diversify its crude oil sources and hedge against continued U.S. sanctions on Iran’s oil exports and oil trade network, including China-based independent refiners that have bought Iranian oil. 

China has also stopped importing U.S. crude oil in the trade war and is unlikely to resume purchases of American oil during the 90-day tariff truce announced early this week. 

As a result of the shifting geopolitical realities, China is buying more crude shipped on TMX than the United States. Since the pipeline launched full-capacity operations last June, Canada has exported on average 207,000 bpd of TMX crude to China, compared to 173,000 bpd shipped to the U.S. in the same period, according to Kpler’s data.  

By Michael Kern for Oilprice.com 

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