Canada is winning the current heavy-crude cycle by pairing record production with a step-change in export optionality to Asia, even as pipeline rationing starts to bite again.
Canadian oil production averaged a record 5.19 million barrels per day in the first half of 2025, up from 5.13 million bpd in 2024, according to the national regulator, while Alberta’s own output climbed to a record 4.4 million bpd in November and represents about 85% of national production.
The pivotal shift is destination mix. Shipments to China more than quadrupled to 88.7 million barrels last year, based on shipping data analyzed by BIMCO, while US oil exports to China fell 61% to 39 million barrels over the same period.
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The reroute accelerated after the Trans Mountain Expansion began operating in May 2024, adding almost 600,000 bpd of export capacity from Alberta to the Vancouver area and enabling sustained Asia-bound volumes.
In December, Suncor, Canadian Natural Resources, Imperial Oil, and Cenovus guided to combined $19.5 billion of capital spending and higher output in 2026, with equity prices near decade highs, as management teams lean into long-duration oil sands projects that typically run 40 to 80 years.
The competitive threat is Venezuelan heavy crude, which is similar to Canadian viscous high-sulfur grades. Venezuela had been shipping most of roughly 900,000 bpd to China, and the US-backed removal of President Nicolás Maduro triggered a brief dip in Canadian producer shares on fears of displacement in the US market.
That selloff faded as expectations reset toward a slower rebound in Venezuelan supply, with Enverus projecting an upside of 500,000 bpd by 2035, described as negative but “not catastrophic.”
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The nearer-term price signal is widening differentials, driven by both global oversupply and renewed pipeline constraints. The monthly average discount of Canadian heavy crude in Alberta to WTI widened to $14.80 a barrel from about $13 a barrel before Maduro’s capture, while post-Trans Mountain differentials have averaged about $12 a barrel versus nearly $17 a barrel in the year before the expansion.
Enbridge’s Mainline rationed more space for February than any month since March 2024. Shippers were required to cut nominated volumes by 22% for dense, high-sulfur oil sands crude and 24% for light crude, a jump that increases the odds the differential stays under pressure while headline crude prices fall.
Commentary around the system points to Trans Mountain running above 90% utilization to access Asia.
Canada has seen this movie, and the numbers are why policymakers are moving. In 2018, bottlenecks became severe enough that Alberta imposed production limits after heavy-crude discounts surged to nearly $50 a barrel, making today’s low-teens discount feel manageable but still economically meaningful at scale.
Enbridge took a final investment decision in November to add 150,000 b/d on Mainline and 100,000 bpd on Flanagan South for $1.4 billion, while Trans Mountain targets capacity of 1.25 million bpd over the next four to five years, up from 890,000 bpd, via drag-reducing agents and incremental pumping.
The biggest swing factor is a proposed new 1.0 million bpd line to British Columbia’s coast, with Alberta signaling a formal submission by June and an approval goal by autumn, as Ottawa pushes diversification amid heightened US trade risk, including President Donald Trump’s threat to impose 100% tariffs on Canadian goods and his stated plan to sell up to 50 million barrels of Venezuelan crude onto international markets.
Information for this briefing was found via The Financial Times, Financial Post, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
