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.
Spotlight content
Related news
Hunt, Crossover sign Orinoco exploration deals
Hunt, Crossover sign Orinoco exploration deals
Caracas, 1 May (Argus) — Two independent US oil and gas producers have agreed to work with Venezuela's state-owned PdV in the Orinoco heavy oil belt. Representatives for privately held Hunt Oil and Crossover Energy Holdings signed memorandums of understanding in Caracas on Thursday in a ceremony with acting Venezuelan president Delcy Rodriguez. Details of the projects were not released, but Rodriguez said they were in Monagas state and were rich in both oil and natural gas. Jarrod Agen, executive director of the White House's National Energy Dominance Council, said at the event the deal would include up to $2bn in investments. Agen arrived in Venezuela with a delegation on Thursday. US charge d'affaires for Venezuela John Barrett also attended the signing event. The agreements are the latest in a series of deals with energy companies including Eni, Repsol, Chevron and BP in recent days. The US has controlled the flow and funds of Venezuela's energy trade since it seized former leader Nicolas Maduro and his wife on 3 January and is now working closely with the remainder of his administration. By Carlos Camacho Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
ADB cuts Asian growth outlook on Mideast Gulf crisis
ADB cuts Asian growth outlook on Mideast Gulf crisis
Singapore, 1 May (Argus) — The Asian Development Bank (ADB) has downgraded its economic growth outlook and raised inflation forecasts for Asia-Pacific, as prolonged disruptions caused by the US-Iran war continue to raise energy prices and weigh on economic activity. The ADB is now forecasting regional growth of 4.7pc this year and 4.8pc in 2027, down from projections of 5.1pc for both years made in its Asian Development Outlook April 2026 report. Inflation in the region is now forecast to rise to 5.2pc this year from 3pc last year, before easing to 4.1pc in 2027. The ADB's previous forecast, released in April, was based on assumptions finalised in early March, about a week after the war started, and envisaged an early stabilisation of the conflict. The revised outlook takes into account prolonged risks to energy production and transport routes, as well as continued pressure on oil and gas prices. It assumes that spot Brent crude prices will average around $96/bl in 2026 before easing to around $80/bl in 2027. This is substantially higher than pre-war levels of around $69/bl in January and February. "We are confronting systemic, long-lasting disruptions to global energy and trade networks, not just temporary volatility," said ADB's president Masato Kanda. If the conflict escalates further and oil prices move higher, growth in Asia-Pacific could slow further to 4.2pc this year and 4pc next year, while inflation could hit 7.4pc this year, the ADB said. Crude futures have risen strongly in recent days. The front-month June Brent contract on the Ice exchange traded as high as $126.41/bl on 30 April , surging by over 7pc from the previous close. The new July contract traded at $110.35/bl at 3:30pm Singapore time (07:30 GMT) today. Brent futures were trading at around $60-70/bl for most of January-February, before the war began. Demand reductions Governments should focus on cutting energy demand where possible, the ADB said. Some of the recommended measures, such as limiting air-conditioning and encouraging working from home, have already been implemented in countries including the Philippines and Singapore. Policies should also focus on stabilisation, instead of the suppression of price signals, the ADB said. "Allowing higher energy prices to pass through, at least in part, can encourage energy conservation, fuel switching, and investment in alternative energy sources," it said. Meanwhile, central banks should try to limit excessive market volatility. Aggressive policy tightening could worsen growth headwinds and exacerbate financial volatility. Some tightening may be warranted, "but anchoring inflation expectations with effective central bank communication will remain key," the ADB said. By Prethika Nair Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Japan’s petchem supplies to last into next year: PM
Japan’s petchem supplies to last into next year: PM
Tokyo, 1 May (Argus) — Japan's supply of naphtha-derived chemical products is sufficient to last beyond the end of this year, prime minister Sanae Takaichi said. Japanese refiners are continuing to produce domestically refined naphtha, while naphtha imports from countries outside the Middle East — including the US, Algeria and Peru — will treble in May compared with levels before the escalation of geopolitical tension in the Middle East, Takaichi said on 30 April. Naphtha imports from such countries were 900,000 kilolitres (190,000 b/d) in April and will surpass 1.35mn kl in May, according to the trade and industry ministry Meti. Japan has also secured stocks of intermediate chemical products, such as polyethylene and polypropylene, totalling around 1.8 months' worth of use. These procurement efforts and inventory utilisation mean Japan can maintain its supply of naphtha-derived chemical products beyond the end of the year, Takaichi said, up from the previous estimate of over six months made in early April. Japan has secured around 1.4mn b/d of crude oil for May, accounting for around 60pc of the country's requirement based on average 2025 imports of 2.36mn b/d, Takaichi said. The country secured more than 500,000 b/d in April, around 20pc of its needs, according to Meti. Japan has been drawing on its stockpiles to cover its remaining requirements. It began releasing a second batch of oil from its national reserves on 1 May, Meti said today. The ministry previously said on 30 April that the start of this release would be delayed by one day to 2 May. Takaichi also reiterated that Japan has sufficient oil supplies to last beyond the end of this year, taking into account its oil reserves and alternative purchases. Tokyo has been providing fuel subsidies to ease the impact of rising oil prices caused by supply disruptions through the strait of Hormuz, as it aims to cap retail gasoline prices at around ¥170/l ($1.08/l). Japan's nationwide average gasoline price has fallen to ¥170/l, which is half the level in European countries and similar to prices in oil-producer the US, Takaichi stressed. Japan's subsidised retail gasoline prices averaged ¥169.7/l as of 27 April, according to Meti. By Kohei Yamamoto Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
PBF to move WTI to US east coast on Jones waiver
PBF to move WTI to US east coast on Jones waiver
Houston, 30 April (Argus) — Refiner PBF Energy is planning to run WTI crude at its eastern US refineries in the second quarter taking advantage of a waiver of the Jones Act, the company said today. With the Jones Act "on the shelf for a period of time", PBF can run non-traditional crudes to the east coast, including WTI and other US barrels, chief executive Matthew Lucey said on an earnings call. PBF's east coast facilities include the 171,000 b/d Delaware City refinery in Delaware and the 100,000 b/d Paulsboro refinery in New Jersey. The refineries run a variety of heavy crude slates, which they can receive through waterborne cargoes or by rail, but can also process lighter, sweeter oil like Bakken crude. The shipments would take advantage of a Jones Act waiver first issued on 17 March and later extended by 90 days through 15 August. US president Donald Trump approved the waiver of domestic shipping requirements in an attempt to ease a spike in commodity prices caused by the US-Iran war. PBF earlier this month shipped heavy crude between two points in California on a foreign-flagged ship, the second instance of the Jones Act waiver being used to move crude cargoes, according to ship-tracking data from Kpler. Phillips 66 has also shipped oil using a Jones Act waiver, moving Bakken crude from its Nederland terminal in Texas to supply its 258,500 b/d Bayway refinery in New Jersey. By Eunice Bridges Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.