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
US plans to blockade Iranian ports on Monday: Update
US plans to blockade Iranian ports on Monday: Update
Updates with details on US blockade of Iranian ports Washington, 12 April (Argus) — The US says it will begin a naval blockade of Iranian ports starting on Monday, after talks between Washington and Tehran aimed at ending the fighting in the Middle East and reopening the strait of Hormuz faltered. The US will institute a blockade against vessels from all nations entering or departing Iranian ports, including ports on the Mideast Gulf and the Gulf of Oman, beginning at 10am ET (14:00 GMT) on Monday, US Central Command said on Sunday. US forces "will not impede freedom of navigation for vessels transiting the strait of Hormuz to and from non-Iranian ports", Central Command said. US president Donald Trump earlier on Sunday had threatened to bar passage of ships cleared by Iran and to interdict any ship in international waters that had paid a toll for exiting the Mideast Gulf. "No one who pays an illegal toll will have safe passage on the high seas," said Trump, who previously mulled joint US-Iranian control over the transit through Hormuz and access to any revenue collected from ships passing through it. Ice Brent June futures jumped by around 8.8pc to $102.60/bl in early Asian trading on news of the US blockade. Separately, the US on 11 April opted not to renew a sanctions waiver that had allowed purchases of Russian crude in floating storage, a decision that could further tighten global oil supplies. Talks end without deal Trump ordered the blockade after marathon talks over the weekend between US and Iranian negotiators in Islamabad, Pakistan, failed to achieve results. US vice president JD Vance, who led the US delegation, blamed the lack of progress after 21 hours of negotiations on Iran's reluctance to renounce ambitions to develop a nuclear weapon. The Iranians refused to give up "the tools that would enable them to quickly achieve a nuclear weapon", Vance said. Tehran denies having a program to develop nuclear weapons. Tehran did not provide a specific reason for the lack of results, but Iranian parliamentary speaker Mohammad Bagher Ghalibaf, who led his country's delegation, attributed the lack of a breakthrough to the US failing "to gain the trust of the Iranian delegation in this round of negotiations". Ghalibaf, ahead of the talks, had demanded a halt in the ongoing Israeli military operations in Lebanon and progress in unfreezing Iranian assets held under a US embargo in foreign banks as a precondition for success in negotiations. The talks followed a ceasefire declared on 7 April, with Washington promising to halt its attacks on Iran while insisting Tehran reopen the strait of Hormuz. But the waterway has largely remained under Iranian control, and the few ships that have passed through it appear to have either paid an unofficial toll to Tehran — believed to be the equivalent of $1/bl for crude tankers — or to have made other arrangements with the Iranian government. At least two Chinese very large crude carriers (VLCC) appear to have transited Hormuz on Sunday. The US also accuses Iran of placing mines in at least some parts of the strait. The Pentagon said on Saturday that two US destroyers transited through the waterway into the Mideast Gulf "as part of a broader mission to ensure the strait is fully clear of sea mines previously laid by Iran's Islamic Revolutionary Guards Corps" (IRGC). Tehran asserted that it had warned the two US warships against transiting Hormuz and that further attempts would draw a military response from Iran. Iran also said that it would respond to a US naval blockade of Hormuz by encouraging Yemen's Houthis to resume attacks in the Bab al-Mandeb waterway connecting the Red Sea to the Indian Ocean, according to Iran's Tasnim news agency, which is linked to the IRGC. A skiff with armed people aboard unsuccessfully attempted to board a sailing vessel in the Red Sea, just north of the Bab al-Mandeb, the UK Maritime Trade Operations said on Saturday. What next? Neither Iran nor the US has ruled out further talks, and Iran's willingness to negotiate directly with the US leaves some hope for a negotiated outcome. The ceasefire is nominally in place until 21 April and could be extended. Ghalibaf headed a delegation that included Iranian security, diplomatic and economic officials and communicated willingness to negotiate substantive issues in a way that eluded contacts between the US and Iran since the end of former US president Barack Obama's administration. But the two sides remain far apart, and Tehran and Washington each appears to believe that it holds leverage over the other. Iran has prioritized discussion of sanctions relief and the return of its frozen assets, in addition to formalizing its control over the waterway that under international maritime law should be free for passage. The US' continued insistence on addressing Iran's nuclear program first precludes immediate results from the negotiations. It is not clear whether Iran's nuclear file was addressed in depth. While Vance brought along his national security advisers, there were no representatives from the UN nuclear watchdog the IAEA, who in the previous round of US-Iranian talks provided the technical expertise on Iran's nuclear program. Trump, who previously said that the energy price spike triggered by the war in Iran would soon ease, took a different tack over the weekend. The blockade of Hormuz is a boon for US crude exporters, he said on Saturday: "The empty ships are rushing to the United States to 'load up.'" Trump told Fox Business on Sunday that oil and gas prices "could be the same or maybe a little bit higher" by the November midterm congressional elections. Israel, which is not party to the talks, also retains its ability to influence the future course of US-Iran relations by conducting military operations in Lebanon and elsewhere in the Middle East. The US-Iran negotiations also have excluded the Mideast Gulf states, even though their economies overwhelmingly depend on the freedom of navigation through the strait of Hormuz. By Haik Gugarats, David Ivanovich and Andrey Telegin Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Saudi East–West crude pipeline back to full capacity
Saudi East–West crude pipeline back to full capacity
London, 12 April (Argus) — Saudi Arabia has restored full pumping capacity on the 7mn b/d East–West crude pipeline and recovered production capacity lost at the Manifa oil field following recent attacks, the energy ministry said on Sunday. Capacity on the East–West pipeline has returned to about 7mn b/d after falling by roughly 700,000 b/d following a strike on one of its pumping stations, the ministry said. Around 300,000 b/d of lost production capacity at the Manifa offshore field has also been restored. The ministry said both recoveries were achieved within a short period of time. Repair work is ongoing at the Khurais field, where production capacity was also reduced by about 300,000 b/d. The ministry said it would announce full restoration once repairs are completed. Saudi Arabia issued a statement on 9 April confirming that the East–West pipeline and the two fields, along with several refineries and port infrastructure, had been damaged in Iranian attacks. It did not disclose the timing of the strikes, but Argus understands that almost all occurred after the announcement of the US–Iran ceasefire on 7 April. The two-week ceasefire remains in place for now, although peace talks in Pakistan this weekend ended without agreement. The East–West pipeline carries crude from Saudi Arabia's eastern fields to the Red Sea port of Yanbu and has become the kingdom's main export route since flows through the strait of Hormuz were effectively blocked. The pipeline had reached full capacity of around 7mn b/d in late March. By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Attacks shut Saudi Satorp refinery units: TotalEnergies
Attacks shut Saudi Satorp refinery units: TotalEnergies
Dubai, 10 April (Argus) — TotalEnergies said on Friday that one of two processing trains at the 460,000 b/d Satorp refinery in Saudi Arabia was damaged in an "overnight incident" on April 7-8, prompting a precautionary shutdown of units at the site. TotalEnergies, which operates Satorp in a 37.5-62.5 venture with Saudi state-controlled Aramco, disclosed the damage a day after Riyadh said Iranian attacks had hit key energy facilities in the country including the refinery. The Saudi statement did not specify when the incident at Satorp occurred or how extensive the damage was. The details have emerged after a ceasefire between the US and Iran that should end nearly six weeks of attacks on energy facilities across the Mideast Gulf region. Elsewhere in the region, TotalEnergies said its production in Qatar, Iraq and offshore UAE had been shut or was in the process of being shut down, representing around 15pc of the company's total output. Those disrupted volumes are tied to some of the company's key partnerships in the region, including LNG and upstream ventures with state-owned QatarEnergy, Iraq's Basra Oil (BOC) and oil concessions with state-owned Adnoc in the UAE. TotalEnergies' onshore UAE production, equivalent to about 210,000 b/d net to the company, is unaffected, it said. The company said the disrupted Middle East output accounts for around 10pc of its global upstream cash flow, but said higher prices would cushion the effects of the disruptions. TotalEnergies said an $8/bl rise in Brent from its base-case assumption of $60/bl would be enough to offset the expected 2026 cash-flow loss from its Iraq, offshore UAE and Qatar assets. It also said the effect of LNG production shutdowns in Qatar on its trading business would be limited to around 2mn t in 2026, because most Qatari LNG is marketed by QatarEnergy. By Rithika Krishna Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Trump showing signs of frustration over Hormuz stasis
Trump showing signs of frustration over Hormuz stasis
London, 10 April (Argus) — US president Donald Trump is beginning to show signs of frustration over a lack of tangible progress with respect to reopening the strait of Hormuz ꟷ a key condition of the ceasefire that the US agreed with Iran earlier this week. The agreement announced on 7 April ostensibly called for an end to strikes by the US and Israel on Iran for two weeks, in return for Iran agreeing to provide safe passage for commercial vessels through the key waterway through co-ordination with the Iranian armed forces. But less than three days in, not only have transits through the strait not increased, they have actually fallen from the already low levels of the past few weeks. Less than eight vessels transited the strait on average in the two days since the ceasefire was agreed, according to Kpler data, down from more than 12 in the first week of April. This compares with more than 100 per day before the start of the war. "Iran is doing a very poor job, dishonourable some would say, of allowing oil to go through the strait of Hormuz. That is not the agreement we have!" Trump said on his Truth Social platform overnight. The slowdown has come, at least in part, due to infractions that Iran said its counterparts have made since the ceasefire was agreed. Tehran, specifically, objected to a massive bombing campaign that Israel carried out across Lebanon on 8 April, as it considered Lebanon to be part of the ceasefire agreement. Pakistan's prime minister Shehbaz Sharif said as much in his announcement of the ceasefire. But Israel's prime minister Benjamin Netanyahu has since insisted that the agreement did not include a ceasefire in Lebanon. The US has said the same. Iran's Fars news agency, which is affiliated with the Islamic Revolutionary Guard Corps (IRGC), cited an informed source shortly after Israel's bombing campaign on 8 April that the strait would "remain closed" until a full ceasefire was established in Lebanon. Kpler data showed just five vessels transited the strait on 8 April, down from 13 the day before. Iran also appeared to carry out strikes against several of its Arab Gulf neighbours in retaliation for the Israeli campaign, and strikes on oil infrastructure on the two islands of Lavan and Sirri, with both Saudi Arabia and Kuwait reporting significant damage to key energy installations, after the ceasefire agreement. In an earlier post on Truth Social, Trump hit out at "reports that Iran is charging fees to tankers going through the Hormuz strait". Iran had "better not be, and if they are, they better stop now!" he said. Trump was referring to a system that Iran has been employing in recent weeks whereby vessels have paid Tehran a fee to transit the waterway safely ꟷ a system first revealed by Iranian parliament member Alaeddin Boroujerdi in mid-March . Hamid Hosseini, the spokesman for Iran's oil, gas and petrochemical products exporters' union, told Argus this week that the system continues, with the fee charged directly linked to the volume of oil on board. "Shipowners are being asked to pay $1 per barrel, and that can be done in the local currency, rials, or cryptocurrency, but only after the vessel has received a permit from the IRGC," Hosseini said. Iranian lawmakers are also preparing to bring a bill formalising Iran's role as the guardian and guarantor of the waterway to the parliament for a vote. But others are pushing back against the idea of Iran taking control of the strait, or setting up a toll there. "Open the strait unconditionally," said Sultan al-Jaber, chief executive of Abu Dhabi's state-owned Adnoc on 8 April. "Iran has made clear… that passage is subject to permission, conditions and political leverage. That is not freedom of navigation. That is coercion." The European Commission, also on 8 April, said under international law, freedom of navigation must be insured, meaning "no payment or toll whatsoever". By Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.