Canada looks for opportunities to sell more oil following US action in Venezuela

Canada sees the current geopolitical conditions and oil market disruption, following the US action in Venezuela, as an opportunity to not only sell its incremental heavy barrels to China but also reach full capacity of a pipeline started some 18 months ago, industry stakeholders told Platts Jan. 8.

In May 2024, a 590,000 b/d expansion was carried out by building the Trans Mountain Expansion with an export outlet along the Pacific Coast and targeting Asia as the prime market for heavy barrels like Access Western Blend and Western Canadian Select.

With the expansion total capacity stood at 890,000 b/d.

"It [the current events] emphasizes the need for Canada to open up the Asian markets that offers at least 10 days of less sailing time compared with VLCCs sailing out of Venezuela," said Greg Stringham, a former vice president of markets with the Canadian Association of Petroleum Producers. "It will still take a while for rebuilding efforts in Venezuela, and that opens up an opportunity to sell more WCS and AWB barrels to China and also South Korea and Japan."

Leading WCS and AWB producers Cenovus Energy and Canadian Natural Resources have capacity of 144,000 b/d and 169,000 b/d, respectively, on TMX, and both are in pole position to export incremental barrels.

No comments were immediately available from either producer, but Phil Flynn, an analyst with PRICE Futures Group, said it will be a great opportunity for Western Canadian producers to find an incremental market in China, despite competition from other sources.

"China is going to continue to need a lot of oil, and there are rumors they are rebuilding their strategic reserves," Flynn said. "They are definitely in the market as big buyers, not just for today but for decades to come."

Canada's longer-term opportunities will be served better with the construction of another export pipeline from Alberta to the West Coast, for which a memorandum of understanding was signed in late 2025 by the provincial and federal governments, Flynn said.

The pipeline will have a capacity in excess of 1 million b/d and is primarily being pursued for crude oil exports targeting Asia, the Alberta government said while signing the MOU.

Canadian exports to China, USGC likely 'pushback'

In late November operator Trans Mountain Corp. said it saw a 12% increase in throughput on TMX to 777,000 b/d in the third quarter.

Since the pipeline started up, a total of 380 vessels were loaded, with 199 of those vessels estimated to sail to China as their final destination, followed by 110 to California, 49 to Washington and Alaska States, 14 to South Korea, four to India and Brunei, and two each to Japan and Singapore.

In all, 57% of the crude headed to Asia last quarter, with 26 terminals in Asia receiving shipments from the Westridge Marine Terminal, TMC stated at the time.

No comments were immediately available from TMC on whether it was preparing for the incremental movement of tankers from the port terminal.

Besides the West Coast, WCS barrels are also marketed to the US Gulf Coast, where they will face competition from other heavy barrels.

US Energy Information Administration data showed some 424,000 b/d of Western Canadian barrels were imported into PADD 3 (USGC) in October 2025.

Separately, the latest S&P Global Energy CERA short-term outlook data indicate an average of 731,000 b/d of crude was exported in 2025. It did not, however, indicate if some of those volumes were re-exported.

A decade ago, there was a discussion about Mexican crude pushing back Canadian heavy barrels. But a different story emerged, Stringham said.

Flynn thinks pricing and market forces will dictate the scenario going forward.

Canada has a history of "filling in the void" with its heavy barrels when there has been a demand, Flynn said.

Discounts for WCS Nederland hit as wide as a $9.60/b discount to the WTI CMA on Jan. 7 following news that the US would market Venezuelan crude, down more than $3.00/b from the previous assessments.

Platts last heard WCS Nederland trade at a $9.00/b discount on Jan. 8. Platts is part of S&P Global Energy.

The differential for WCS Hardisty has also been under pressure from Venezuelan barrels. WCS Hardisty was last heard traded at a $14.90/b discount to the WTI CMA and heard traded as weak as a $15.10/b discount.