Weight of Freight: TMX spurs new Aframax, VLCC trade in Pacific basin
The first three months of Canada's Trans Mountain Expansion (TMX) have sent a surge of crude to refiners in California and China, shifting tanker demand in the Pacific basin.
The 590,000 b/d TMX project nearly tripled the capacity of Trans Mountain’s pipeline system to 890,000 b/d when it opened on 1 May, linking Alberta's oil sands to Canada's west coast for direct access to lucrative Pacific Rim markets, where buyers are eager for heavy sour crude.
Between 20 May, when the first TMX cargo began loading, and 20 August, about 165,000 b/d of Vancouver crude exports landed at ports on the US west coast, primarily in California, up from about 30,000 b/d in that same span last year, according to data from analytics firm Kpler.
The freight rate for a Vancouver-US west coast Aframax shipment averaged $1.98/bl for Cold Lake between 1 May and 20 August. This ranged from a low of $1.50/bl from 1-3 May when shipowners repositioned to the region in anticipation of TMX to a high of $2.32/bl from 13-14 June, according to Argus data.
The new oil flow into the US west coast has displaced shipments from farther afield in Ecuador and Saudi Arabia. Crude exports from those countries into the US west coast averaged 110,000 b/d and 25,000 b/d, respectively, between 20 May and 20 August, down from 155,000 b/d and 135,000 b/d over the same stretch in 2023, according to Kpler.
The growth of the Vancouver market, which benefits from its proximity to California, has reduced tonne-miles, a proxy for tanker demand, into the US west coast. This has outpaced slightly lower crude demand, which fell in part due to Phillips 66 halting crude runs at its 115,000 b/d refinery in Rodeo, California, in February to produce renewable fuels, as well as weaker-than-expected road fuel demand this summer.
Tonne-miles for US west coast crude imports fell by 14pc to 106bn between 20 May and 20 August 2024 compared with the same period a year earlier, Vortexa data show, while overall crude imports declined just 8.6pc to 1.37mn b/d, according to Kpler.
PAL-ing around with VLCCs
Though much of Vancouver’s exports have been shipped to the US west coast, Canadian producers have found ready buyers in Asia-Pacific as well, where about 160,000 b/d of Vancouver exports went between 20 May and 20 August, compared with none a year prior, Kpler data show.Buyers and sellers have displayed a preference for using ship-to-ship transfers onto very large crude carriers (VLCCs) at the Pacific Area Lightering zone (PAL) off the coast of southern California, rather than sending Aframaxes directly to refineries in east Asia. Of the 30 Vancouver-origin Aframax cargoes that have landed in China, South Korea and India, 19 were transferred onto VLCCs at PAL, Kpler data show. Seven cargoes were sent directly to east Asia on time-chartered Aframaxes — the majority by Suncor — and just four were sent using spot tonnage, likely due to the expensive economics of trans-Pacific Aframax shipments.
The Vancouver-China Aframax rate between 1 May and 20 August averaged $5.90/bl, with a low of $4.94/bl from 19-20 August and a high of $6.41/bl from 1-10 May and again from 4-12 June, according to Argus data.
Over the same time, the cost to reverse lighter, or transfer, three 550,000 bl shipments of Cold Lake crude from Vancouver onto a VLCC at PAL averaged about $8.055mn lumpsum, or $4.92/bl, with a low of $4.35/bl from 8-13 August and a high of $5.45/bl on 22 May, according to Argus data. This includes $150,000 ship-to-ship transfer costs at PAL, 15 days of VLCC demurrage and three days of Aframax demurrage for each reverse lightering.
VLCC costs could change preferences
Though it may have been cheaper to load TMX crude on VLCCs at PAL since May, volatility in the VLCC market — which often falls to yearly lows in summer before climbing to seasonal highs in the winter — could entice traders to opt for direct Aframax shipments if VLCCs hit their expected peak in the winter.
VLCC costs for shipments from the US west coast to China are influenced by the VLCC markets in the Mideast Gulf and Brazil, where ships look for their next voyage after discharging on the US west coast.
For now, Vancouver-loading Aframax rates are under pressure from the reemergence of VLCCs in what had become an Aframax trade in Thailand, boosting Aframax supply in the Pacific and pulling the class’s rate to ship crude from Vancouver to the US west coast to its lowest level in more than three months on 19 August.
In mid-July, VLCCs resumed discharging via single point mooring (SPM) at Thailand's port of Map Ta Phut for the first time since January 2022, ship-tracking data from Vortexa show. Prior to the SPM's return to service, VLCCs could discharge cargoes only by lightering onto smaller Aframaxes, which would then unload at a different berth in the port.
This created demand for about eight Aframax lighterings each month, but with VLCCs in Thailand again able to discharge directly, that demand is effectively halted, putting downward pressure in the broader southeast Asia Aframax market.
Since July, two Aframaxes have left the southeast Asia market for Vancouver, according to ship tracking data from Kpler: the Eagle Brisbane, which previously was used in lightering operations at Map Ta Phut, and the Blue Sea, which recently hauled fuel oil from nearby Singapore to China.
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US restarts enforcement of Iran blockade: Update
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Adds US disabling of oil tanker New York, 15 July (Argus) — The US military has begun disabling and redirecting vessels that violate its renewed blockade of Iranian ports, following the breakdown of a four-week-old ceasefire agreement between the countries. US Central Command (Centcom), which oversees US forces in the Middle East, said it disabled the empty Curacao-flagged oil tanker Belma while it was transiting international waters toward Kharg Island on 15 July. "The commercial vessel ignored multiple warnings as it attempted to violate the US blockade," Centcom said on social media. "A US aircraft disabled the vessel after firing hellfire missiles into the ship's smokestack. The ship is no longer transiting to Iran." In the first 24 hours of enforcing the renewed blockade, Centcom said it also redirected two compliant commercial vessels. Prior to the US and Iran signing of the agreement on 18 June, US forces imposed a naval blockade from the Gulf of Oman and a northern section of the Arabian sea, preventing ships from reaching Iranian ports and turning vessels back toward Iran's coast. The US Navy redirected 140 ships and disabled nine vessels from 13 April to 18 June as part of this initial blockade. But enforcement activity during the first US blockade was uneven. While the blockade did impede Iranian exports, Iranian crude loading activity continued with ballast vessels able to make it through the blockade . US, Iranian actions endanger mariners The US on Tuesday reimposed its blockade on Iranian ports following the breakdown of the shaky truce it reached last month with Iran, including the restart of Iranian attacks on commercial vessels transiting the strait of Hormuz. The US has framed its latest military actions as intended to degrade Iran's ability to attack commercial shipping in the strait of Hormuz while Iran "targets innocent civilians transiting the strait and in neighboring Gulf countries", Centcom said Wednesday on social media. "Iran has intentionally targeted civilians across the region by attacking seven commercial ships resulting in nearly a dozen civilian crew members killed, missing or injured," Centcom said. "US forces are holding Iran accountable for unwarranted aggression that continues to endanger innocent lives." US enforcement of its original blockade on Iranian ports also resulted in mariner casualties. In June, the US attacked the tanker Settebello , which resulted in the deaths of three Indian crew members, an action condemned by the International Maritime Organization and the Indian Ministry of Foreign affairs . The US has continued to encourage vessels to transit the strait via the southern route along Oman's coastline, a path that Iran has been targeting, increasing risks to mariners. "US-assisted commercial transits continued despite the elevated threat environment," the UK Trade Maritime Information Center wrote in a 14 July advisory note. Iran views transits on non-Iranian controlled routes as violations of the 18 June agreement and as a challenge to its control over the waterway. By Charlotte Bawol Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
US restarts enforcement of Iran blockade
US restarts enforcement of Iran blockade
New York, 15 July (Argus) — The US military has begun redirecting vessels that violate its renewed blockade of Iranian ports following the breakdown of a four-week-old ceasefire agreement between the countries. "Since restarting the naval blockade against Iranian ports 17 hours ago, US forces have redirected two commercial vessels attempting to run the blockade," the US Central Command (Centcom), which oversees US forces in the Middle East, said on social media at 9:20am ET (13:20 GMT) Wednesday. "The US military remains vigilant and prepared to ensure full compliance." Prior to the US and Iran signing of the agreement on 18 June, Centcom forces imposed a naval blockade from the Gulf of Oman and a northern section of the Arabian sea, preventing ships from reaching Iranian ports and turning vessels back toward Iran's coast. The US Navy redirected 140 ships and disabled nine vessels from 13 April to 18 June as part of this initial blockade. But enforcement activity during the first US blockade was uneven. While the blockade did impede Iranian exports, Iranian crude loading activity continued with ballast vessels able to make it through the blockade . US, Iranian actions endanger mariners The US reimposed its blockade on Iranian ports following the breakdown of the shaky truce it reached last month with Iran and the restart of Iranian attacks on commercial vessels transiting the strait of Hormuz. The US has framed its latest military actions as intended to degrade Iran's ability to attack commercial shipping in the strait of Hormuz while Iran "targets innocent civilians transiting the strait and in neighboring Gulf countries", Centcom said Wednesday on social media. "Iran has intentionally targeted civilians across the region by attacking seven commercial ships resulting in nearly a dozen civilian crew members killed, missing or injured," Centcom said. "US forces are holding Iran accountable for unwarranted aggression that continues to endanger innocent lives." Yet, US enforcement of its original blockade on Iranian ports also resulted in mariner casualties. In June, the US attacked the tanker Settebello , which resulted in the deaths of three Indian crew members, an action condemned by the International Maritime Organization and the Indian Ministry of Foreign affairs . The US has continued to encourage vessels to transit the strait via the southern route along Oman's coastline, a path that Iran has been targeting, increasing risks to mariners. "US-assisted commercial transits continued despite the elevated threat environment," the UK Trade Maritime Information Center wrote in a 14 July advisory note. Iran views transits on non-Iranian controlled routes as violations of the 18 June agreement and as a challenge to its control over the waterway. By Charlotte Bawol Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Iraqi leader invites US oil investment
Iraqi leader invites US oil investment
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Iran says 200 ships sought Hormuz permits since June
Iran says 200 ships sought Hormuz permits since June
Dubai, 14 July (Argus) — More than 200 non-Iranian vessels co-ordinated with Iran's Persian Gulf Strait Authority (PGSA) to transit the strait of Hormuz in the three weeks after Tehran and Washington signed their memorandum of understanding (MoU) last month, the authority said on Tuesday. The PGSA was formed as part of Tehran's push to tighten control over shipping in and around the critical strait of Hormuz after the start of the US-Israel war with Iran in late February. Tehran has required vessels seeking to transit the strait to apply in advance for a permit from the PGSA. In many cases, this also involved paying a fee to the authority. This fee was waived for 60 days as part of the MoU signed on 18 June, which was intended to lay the groundwork for reopening the strait to commercial shipping, ending the fighting and starting talks towards a final peace deal. But tensions over control and administration of the strait resurfaced last week as Iran and the US began exchanging fire. Iran declared the strait closed again over the weekend of 11-12 July, and US president Donald Trump announced on Monday that Washington would reimpose a naval blockade on Iran. "Prior to the recent provocations by US forces in the region that led to the closure of the strait, more than 200 non-Iranian vessels co-ordinated with the PGSA during the three weeks following the signing of the memorandum of understanding," the authority said. A breakdown published by the PGSA showed that 41pc of vessels applying for permits were "oil tankers". Bulk carriers accounted for 27pc, container ships 18pc and LNG carriers 2pc. The PGSA said 53pc of vessels submitting requests were travelling eastbound through the strait to exit the Mideast Gulf, while the remaining 47pc were westbound and entering the Gulf. Of the eastbound vessels, 21pc were destined for China, 20pc for India and 29pc for elsewhere in Asia-Pacific. Another 22pc were travelling to destinations in the wider Middle East region, including ports in Oman, Saudi Red Sea ports and the UAE port of Fujairah. Of the westbound vessels, 21pc originated in India, 19pc in China and 20pc from other Asian countries. The PGSA said 24pc of vessels entering the Mideast Gulf through the strait originated from ports "within the region". The PGSA said 79pc of vessels that co-ordinated with it before transiting the strait also took out insurance cover from the authority. It said 14pc of vessels that had applied were still awaiting permits. It has taken the PGSA an average of 50 hours to issue permits, the authority said. Rival routes Ship transits through the strait of Hormuz have collapsed since the weekend to levels not seen since the early days of the war. At the heart of the latest flare-up is a dispute between Tehran and Washington over the management of the strait. The broadly worded MoU signed last month called for Iran to "make arrangements… for the safe passage of commercial vessels". Tehran interpreted that clause as giving it total control over which vessels can use the waterway and which route they should take. The US has rejected that interpretation. Iran has prescribed a northern route through the strait along the Iranian coastline, arguing that other routes remain unsafe because naval mines have yet to be cleared. But the US has promoted a southern route through the strait along the Omani coastline. Washington has said 380mn bl of crude exited the Mideast Gulf, and more than 800 ships passed through the strait via this route, between 18 June and 10 July — roughly the same period covered by the PGSA data. By Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.