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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Opec+ output hits Iran-war high
Opec+ output hits Iran-war high
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Canadian oil sector to grow in 2027: ATB survey
Canadian oil sector to grow in 2027: ATB survey
Calgary, 8 October (Argus) — Canada's oil sector is expected to grow in 2027 as progress among proposed export pipelines and friendlier policy from Ottawa are expected to outweigh declining benchmark prices, ATB Capital Markets said in its Fall 2026 Energy Sector Survey . The semi-annual survey, released on Thursday, garnered feedback from executives at 91 companies including exploration and production (E&P), energy services and institutional investors. Calgary-based ATB's survey ran from 14-28 September and emulates the Dallas Fed survey in the US. About 96pc of oil companies plan to grow production by 10pc in 2027 compared with 2026 levels, despite an assumption that WTI crude at Cushing, Oklahoma, will fall to $65-75/bl across next year. About half of E&P companies expect to increase total capital budgets. About 84pc of E&P companies said their outlook improved over the past three months and 88pc anticipate the market to improve further in the coming six months. Seven out of 10 energy service companies, meanwhile, indicated an improved outlook over the prior three months with eight in 10 expecting better times in the coming six months. Nearly nine in 10 of those surveyed are encouraged by steps the federal government has taken to support the industry, with a similar number expecting foreign direct investment to rise over the next two years. Institutional investors say they are now more likely to invest in Canada as a consequence of the ongoing US-Iran war that has cut off some Middle East supplies. Nearly 80pc indicated they are either moderately, or significantly, more willing to invest in Canadian energy now. "The background for Canadian energy is the best I've seen since the late 1970s," one institutional investor said. Most also view Venezuela as being a low-impact risk in the next three to five years. But improving sentiment in Canada's oil and gas sector has energy services executives reporting "excess demand" rather than "excess capacity" for the first time since 2022, ATB said. "We continue to see employment constraints in getting well servicing crews to meet customer demand," an energy services executive said, but added this issue is not as significant on the drilling side. While tight oil export capacity has become less concerning for industry with pipeline proposals making either regulatory or commercial progress, getting them built remains a top priority. About 91pc of respondents with a view said the Trans Mountain-led 1mn b/d Pacific Link pipeline will reach a positive final investment decision, as will the related Oil Sands Alliance's Pathways carbon capture project which continues to draw skepticism over its benefits. About 74pc of respondents with an opinion said the Pathways project will either have no impact or be harmful to the industry's competitiveness in the long run. South Bow's 600,000 b/d Prairie Connector is generally expected to also go forward, while respondents were not optimistic about the Ontario-led 500,000 b/d Northern Shield Energy Corridor pipeline. The federal government's commitment to Pacific Link, one-year project approvals and a new accelerated tax deduction would be a "significant tail wind for Canadian oil and gas" should those become a reality, an energy services executive said. The governing Liberal party has come to understand that slow decision-making and being largely reliant on a single customer, the US, has become a weakness amid trade hostilities. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
No plans to attack Iran before 3 Nov: Trump
No plans to attack Iran before 3 Nov: Trump
Washington, 8 October (Argus) — The US will not resume hostilities against Iran before the 3 November midterm congressional elections, President Donald Trump said on Thursday. The US is "having productive discussions" with Iran but the US naval blockade and campaign of economic pressure against Iran will continue, Trump said in a social media post. He claimed that 22mn bl of crude flowed through the strait of Hormuz on Wednesday under the protection of the US military. Trump's statement is not an ironclad assurance that direct hostilities between the US and Iran will not resume any time soon. Tehran has confirmed continued indirect dialogue with the US, through mediators, but chances of a diplomatic breakthrough appear low. Trump, meanwhile, is working to prevent a further increase in US retail fuel prices, which already have hurt the Republican party's chances of retaining control of both chambers of the US Congress at the midterms. WTI and Ice Brent crude futures climbed higher on Thursday after Iran expanded attacks on tankers in the Mideast Gulf and the strait of Hormuz. November Nymex WTI fell after Trump's statement, but it was still 4pc higher, at $91.65/bl, than the Wednesday settlement price as of 1:45pm ET. Iran has increased the pace of its attacks against commercial shipping in the last week, challenging the Trump administration's claim that it had restored oil flows through the strait of Hormuz to pre-war levels. The US-sponsored operation to enable transporting greater volumes of oil through Hormuz has significantly increased freight and insurance costs for the tankers that do make it to the Gulf of Oman without being hit by Iran. The Central Command (Centcom), which oversees the Middle East-based US forces, on Thursday pegged the daily flow of oil and other products through Hormuz at 20mn b/d. Centcom chief Admiral Brad Cooper, during a virtual meeting with the representatives of the freight industry "acknowledged the sacrifices made by civilian crews due to unwarranted Iranian attacks". The US Treasury Department, also on Thursday, announced sanctions on an additional 17 tankers accused of transporting Iranian bitumen, asphalt, ethylene, fuel oil, naphtha, propane and crude to markets in Asia. Treasury also announced sanctions against India-based broker Samudra Marine Services and 18 other companies in the UAE, UK, Turkey and other countries, accusing the firms of facilitating sales of Iranian crude and products. Do the midterms matter? Iran has been part of Trump's election narrative for about a month, as he claimed that Tehran is hoping for a victory by the US Democrats who, according to Trump, would be too soft on the Iranian government. Officially, Tehran has pronounced itself indifferent to the outcome of the US congressional elections. Tehran has pitched a plan to stop attacking ships passing through Hormuz if the US removes the naval blockade, pauses sanctions and repatriates frozen Iranian funds in foreign banks — effectively returning to the terms of the now defunct June "memorandum of understanding" between the US and Iran. Trump said earlier this month he rejected the proposal. But Iran's foreign minister Abbas Araghchi claimed on Thursday that the Iranian plan remains a subject of discussions. Trump encountered significant blowback in the US and the Mideast Gulf after concluding a deal with Iran in June, Washington think tank Arab Gulf States Institute executive vice-president William Roebuck said on 6 October. Trump as a result came to the conclusion that "he was better off leaning into the war through the midterms and not cutting a deal that would involve a lot of concessions that would reflect the kind of leverage that Iran had built up in the course of the the war," Roebuck said. US Democratic lawmakers earlier this year succeeded in advancing resolutions, with limited Republican support, that called on Trump to end hostilities with Iran. But even a majority-Democratic Congress cannot compel the White House to stop the war unless it votes down the Pentagon's request for supplemental funding to replenish the US munitions stocks and pay for other costs of the war — an issue that may not find broad support within the Democratic party. Trump appears to believe "that he'll be freer, actually, to do what he wants and to put more pressure" on Iran after the midterms, Roebuck said. "I don't think that's going to work, but that's the dynamic that (Trump is) working with." By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Hurricane heads for US Gulf coast: Update
Hurricane heads for US Gulf coast: Update
Updates shut-in production data; port information Houston, 8 October (Argus) — Hurricane Isaias, the first named hurricane of the 2026 Atlantic season, is moving toward the US Gulf coast near Alabama, threatening an area with significant refining assets and causing 1.3mn b/d of oil production to be shut in. Landfall is expected Friday night or early Saturday along the Florida-Alabama border, according to the National Hurricane Center (NHC). The storm will be a strong Category 2 storm at landfall with sustained winds of up to 110 mph, according to AccuWeather. The NHC issued a hurricane warning with heavy rain and winds of 74 mph or higher from Ocean Springs, Mississippi, to the borders of Bay County and Gulf County in Florida. NHC also issued a tropical storm warning with winds between 39-73mph for a wider area stretching west to the Jefferson/Plaquemines parish borders in Louisiana and east to the Aucilla River in Florida. Isaias is currently in the Gulf of Mexico about 170 miles north of Progreso, Mexico, with sustained winds of 85 mph with higher gusts, according to the NHC. Oil and gas producers in the Gulf of Mexico have evacuated workers and curbed output ahead of the storm. As of 12:30pm ET Thursday, 1.3mn b/d of US oil production, or 63pc of total offshore output, was offline, according to the Marine Minerals Administration. About 1.1 Bcf/d of natural gas production, or 57pc of total US Gulf output, also was shut. Shell said earlier this week it was evacuating all staff and shut production at its Mars, Olympus, Ursa, Vito, and Appomattox assets as a precaution. Shell also moved non-essential personnel from its Stones platform. Chevron said it had shut in production at five of its operated facilities in the region. The onshore areas threatened by the storm include several large oil refineries, such as Chevron's 356,000 b/d Pascagoula, Mississippi, plant, PBF Energy's 190,000 b/d Chalmette, Louisiana, refinery, Marathon's 617,000 b/d Garyville, Louisiana, refinery, Shell's 231,000 b/d Norco, Louisiana, refinery and Valero's 125,000 Meraux and 215,000 b/d St Charles facilities also in Louisiana. Power outages and flooding could impact refinery operations at a time when US refiners are operating at levels above 90pc amid global fuel shortages caused by the wars in the Middle East and Russia. The current NHC projected trajectory of Isaias would likely spare most of the refineries in Louisiana from the most severe hurricane impacts. The US Coast Guard set the port of Mobile, Alabama, under condition Yankee, meaning gale force winds (39-54mph) were expected within 24 hours. Traffic restrictions were in effect Thursday morning allowing vessels to enter the port only with Coast Guard permission. The port said it would suspend vessel operations at its public berths at 1pm ET Thursday. The Coast Guard on 7 October set condition X-ray for the ports of Plaquemines, New Orleans, and St Bernard in Louisiana, which means gale force winds were forecast within 48 hours. Those ports remain open to commercial traffic. By Eunice Bridges and Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.