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U.S. west coast refiners were expected to buy bulk of TMX

crude

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Global oil flows shifting in the face of U.S. trade policy

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China reluctant to be over-reliant on Russian oil

By Amanda Stephenson and Arathy Somasekhar

CALGARY/HOUSTON, May 16 (Reuters) - China has emerged as

the top customer for Canadian oil shipped on the expanded Trans

Mountain pipeline, ship tracking data showed, as a U.S. trade

war has shifted crude flows in the year since the pipeline

started operating.

China's new interest in Canadian oil comes as U.S. President

Donald Trump's trade war has strained relations between longtime

allies Washington and Ottawa. It also reflects the impact of

U.S. sanctions on crude from countries like Russia and

Venezuela.

Canada is the world's fourth-largest oil producer, but its

main oil-producing province of Alberta is landlocked with

limited access to tidewater ports. That means the bulk of

Canadian oil - about 4 million barrels per day or 90% - is

exported to the U.S. via pipelines that run north-south.

The C$34 billion ($24.40 billion) Trans Mountain is Canada's

only east-west oil pipeline, carrying oil to the Pacific Coast

where it can be loaded onto tankers for export. The expansion,

which began operations on May 1, 2024, tripled the pipeline's

capacity to 890,000 barrels per day and opened opportunities for

Canadian oil along the U.S. West Coast and in Asian markets.

While oil is currently exempt from U.S. tariffs, Canada has

sought to diversify its exports due to brief U.S. duties on its

crude and Trump's threats to annex the country.

Canada shipped about 207,000 barrels per day (bpd) on

average to China since the Trans Mountain expansion ramped up to

full operations in June last year, ship tracking data on Kpler

showed. That was a huge increase from an average of about 7,000

bpd in the decade to 2023.

The U.S. took about 173,000 bpd from the pipeline in the

same period.

China's top spot as the TMX buyer defies some early

expectations that the U.S. would be the biggest buyer of crude

shipped via the pipeline, which is owned by the Canadian

government.

Many expected its barrels to land on the West Coast versus

Asia, which has access to cheaper Russian oil.

However, Trump's protectionist policies have in recent

months made Canada more attractive to Chinese buyers, said

Philippe Rheault, director of the China Institute at the

University of Alberta.

China has also been reluctant to be over-reliant on Russian

energy supplies, Rheault said.

"A lot of China's refineries are also mindful of U.S.

sanctions, and so have been trying to diversify away from oil

from Venezuela and other places," he added.

SHIFTING FLOWS

In the year since the pipeline's expansion, Canadian exports

of crude to countries other than the U.S. rose nearly 60% to an

annual record of about 183,000 bpd in 2024, according to

Statistics Canada.

Other nations taking Canadian crude include South Korea,

Japan, India, Brunei, and Taiwan, ship tracking data showed.

In recent months, several Canadian politicians have called

for new pipelines to coastal export terminals to reduce

dependency on the U.S. But regulatory, financial and political

hurdles continue to stifle that development.

TMX was about 77% full on average in 2024, according to

documents it filed with the Canada Energy Regulator, below the

83% the company forecast, in part due to the high tolls the

operator has been charging to make up for cost overruns during

construction.

The pipeline is expected to be 84% full this year, and ramp

up to 92% in 2027.

Its operator, Trans Mountain Corp, has said it is looking at

expansion projects that could add between 200,000 and 300,000

bpd of capacity to the system.

Given China's increased desire to find new, stable supplies

of crude, the bulk of any additional capacity on TMX is likely

to go to Asia rather than the U.S. West Coast, said Skip York,

chief energy strategist with Turner, Mason & Company.

"I think you're going to see virtually all of those

incremental vessels flow west" for export to China, he said.

($1 = 1.3936 Canadian dollars)