China Becomes Canada’s Top Oil Customer Amid U.S. Tensions: Trans Mountain Pipeline Reshapes Global Flows

Economic

Commodity

Summary:

Canada's oil, long dependent on the U.S. market, is now increasingly flowing to China following trade tensions with Washington and the operational boost of the Trans Mountain pipeline...

From Sole Buyer to Second Fiddle: The U.S. Loses Ground

For decades, the United States was virtually the only significant buyer of Canadian crude, particularly Western Canadian Select (WCS). But this changed in 2024 when Canada completed the expansion of the Trans Mountain pipeline, boosting its capacity to 890,000 barrels per day. As a result, the volume of Canadian oil flowing to China has now surpassed that sent to the U.S., averaging 207,000 barrels per day to China versus 173,000 to the U.S. in the same period.

Amid falling global oil prices driven by oversupply fears, China the world’s largest oil importer has taken full advantage. In October 2025, 70% of crude shipments from British Columbia’s port of Vancouver were reportedly headed for China. Analysts believe the actual percentage may be even higher, with some shipments first routed to Los Angeles before being redirected to Asia.

China is aggressively building its oil reserves, with Goldman Sachs estimating an average stockpiling rate of 990,000 barrels per day this year. Although this pace is expected to slow to 500,000 barrels per day in 2026, it may remain elevated if oil prices continue to decline. To accommodate these inflows, China plans to build 11 new storage facilities, adding 169 million barrels in capacity equivalent to about two weeks of imports.

Canadian Oil Gets a Boost

This redirection has delivered unexpected benefits to Canadian producers. Even as international crude benchmarks falter, prices for Western Canadian Select have surged, reaching their highest levels since July an unusual upswing for the traditionally slow Q4 season. S&P Global projects that Canadian oil sands output will hit a record 3.5 million barrels per day in 2025, rising to 3.9 million by 2030.

The Trans Mountain pipeline, now crucial to Canada’s Asian pivot, is forecast to operate at 84% capacity in 2025, up from 77% in 2024, with 92% utilization projected by 2027 if current demand trends persist.

U.S.-Canada Energy Tensions Simmer

Despite reduced flows southward, Washington and Ottawa are revisiting the controversial Keystone XL pipeline, previously canceled under President Biden. In a recent interview with the Financial Times, Canada’s Energy Minister Tim Hidgson stated that Canada is open to energy security talks provided the U.S. addresses unresolved disputes over steel and aluminum tariffs.

With China emerging as the new “VIP customer” for Canadian crude and investing heavily in oil infrastructure, Canada’s energy future is becoming increasingly tied to Asia. The redirection not only challenges the U.S.'s dominance as Canada's energy partner but also signals a broader shift in global supply chains one shaped by geopolitical tensions, trade realignments, and infrastructure innovation.

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