China becomes top buyer of Canadian crude via Trans Mountain as trade shifts east

According to ship monitoring data, China has emerged as the biggest consumer of Canadian petroleum delivered via the newly expanded Trans Mountain pipeline, showing the significant shift in global oil flows caused by geopolitical concerns and shifting trade dynamics.

On May 1, 2024, the Canadian government-owned Trans Mountain pipeline, or TMX, resumed full operations following a massive expansion.

The C$34 billion project boosted the pipeline's capacity to 890,000 barrels per day (bpd), giving Canadian producers direct access to the Pacific Coast and allowing for expanded exports to Asian markets.

Since achieving full operational capacity in June 2024, the pipeline has changed Canada's oil export scene.

According to data from ship tracking service Kpler, China has imported an average of 207,000 bpd from TMX, a significant rise over the 7,000 bpd average during the preceding decade.

In contrast, the United States received approximately 173,000 bpd from the same route during this time.

Geopolitical shifts drive diversification

According to Reuters, the growing interest in Canadian oil by China takes place while the world is experiencing a reordering of the international energy trade apparatus.

Due to the intensifying trade dispute between the United States and Canada under President Donald Trump, Canada has been moving to diversify away from the United States, which takes about 90% of Canadian oil exports.

Oil is currently exempt from US tariffs, but previous threats of crude duties and a more protectionist tone from Washington have prompted Canadian officials and producers to pursue more permanent and diversified markets.

The United States' sanctions on key crude providers, including Russia and Venezuela, have exacerbated these efforts, since they have restricted choices available to Chinese processors.

Canada, the world's fourth-largest oil producer, has long been limited by its location. Alberta, the largest oil-producing province, is landlocked, which limits direct access to international markets.

TMX is Canada's only east-west pipeline, capable of reaching tidewater ports and providing direct access to the Asia-Pacific region.

Asian markets gain strategic importance

Although many market watchers expected the US West Coast to be the principal recipient of TMX crude due to its proximity, Asia has emerged as the preferred destination.

In addition to China, South Korea, Japan, India, Brunei, and Taiwan have expanded their imports of Canadian crude, indicating Asia's growing demand for diverse energy sources.

Statistics Canada reported a 60% year-over-year rise in Canadian petroleum shipments to non-US destinations in 2024, reaching an annual record of nearly 183,000 barrels per day.

China's dominant position as a TMX customer reflects both geopolitical and economic factors.

Chinese refiners are concerned about becoming overly reliant on Russian supply, while US sanctions have made oil from Venezuela and other sanctioned countries less profitable.

Canadian oil provides a relatively reliable and politically neutral choice.

Capacity constraints and future growth

In 2024, TMX operated at 77% capacity on average, falling short of the objective of 83% due to the pipeline expansion.

The exorbitant tolls required to compensate for cost overruns during the expansion contributed to this disparity.

According to filings with the Canada Energy Regulator, usage is projected to reach 84% in 2025 and 92% by 2027.

Its operator, Trans Mountain Corp., is also considering future expansion projects that could increase that capacity by up to 200,000 to 300,000 bpd.

Most of this projected volume will likely head to Asia, where strong demand for stable, non-sanctioned crude remains, according to industry analysts.

With trade friction continuing and energy security remaining an important priority for importing countries, Canada’s function as a dependable oil provider is forecast to increase.

Developing conditions regarding TMX provide evidence of a longer-term shift from North American reliance to a new, wider, export policy with emphasis on the Asian theatre.