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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Electricity drove surge in energy demand in 2024: IEA
Electricity drove surge in energy demand in 2024: IEA
London, 24 March (Argus) — Electricity demand drove a jump in overall global energy consumption growth in 2024, lifting it well above the average pace of increase in recent years, energy watchdog the IEA said today. Global energy demand rose by 2.2pc in 2024 — higher than the average annual demand increase of 1.3pc between 2013 and 2023 — according to the Paris-base agency's Global Energy Review . Global electricity consumption rose by 4.3pc, driven by record-high temperatures that led to increased cooling demand, growing industrial consumption, the electrification of transport and from data centres and artificial intelligence, the IEA said. Renewables and nuclear covered the majority of growth in electricity demand, at 80pc, while supply of gas-fired power generation "also increased steadily", it said. New renewable power capacity installations reached around 700GW in 2024 — a new high — while renewable power sources and nuclear together made up 40pc of total generation in 2024, it said. Global gas demand rose by 2.7pc in 2024, with an increase in "fast growing Asian markets", the IEA said. It noted growth of more than 7pc and 10pc in China and India, respectively. But "growth in global oil demand slowed markedly in 2024", the organisation said. Oil demand rose by 0.8pc — compared with 1.9pc in 2023 — and oil's share of total energy demand fell below 30pc last year "for the first time ever". A rise in electric vehicle (EV) purchases was a key contributor to the drop in oil demand for road transport, and this offset "a significant proportion" of the rise in oil consumption for aviation and petrochemicals, the IEA said. The rate of increase in coal demand slowed to 1.1pc in 2024, half the pace seen in 2023. "Intense heatwaves" in China and India "contributed more than 90pc of the total annual increase in coal consumption globally", for cooling needs, the IEA found. Renewables limit rise in emissions The IEA repeatedly noted the significant effect that extreme weather in 2024 had on energy systems and on demand patterns. Last year was the hottest ever recorded, beating the previous record set in 2023. "Weather effects contributed about 15pc of the overall increase in global energy demand", the IEA said. Global cooling degree days were 6pc higher in 2024 on the year, and 20pc higher than the 2000-20 average, it said. But the "continued rapid adoption of clean energy technologies" restricted the rise in energy-related CO2 emissions, which fell to 0.8pc in 2024 from 1.2pc in 2023, the IEA said. Energy-related CO2 emissions still hit a record high of 37.8bn t in 2024, but the rise in emissions was lower than global GDP growth, it said. "The majority of emissions growth in 2024 came from emerging and developing economies other than China," the IEA said. Emerging and developing economies accounted for more than 80pc of the increase in global energy demand last year, it said. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
US strikes Houthis with eye on Iran — to what end?
US strikes Houthis with eye on Iran — to what end?
Stoking regional tensions to get Tehran to the negotiating table appears unlikely to have Trump's desired outcome, write Nader Itayim and Bachar Halabi Dubai, 21 March (Argus) — As US president Donald Trump's administration intensifies its military campaign against Yemen's Houthis, it has issued yet another stark warning to Iran and its leadership — end support for the rebel group or face "dire" consequences. The ultimatum is in line with the ‘maximum pressure' approach Trump has adopted to force Iran back to the negotiating table. But success looks far from certain. This past week saw US forces carry out a series of air strikes against Houthi targets, soon after the rebel group said it would restart attacks on Israeli ships passing through the Red Sea and Arabian Sea, the Bab el-Mandeb strait and Gulf of Aden after Tel Aviv ignored a Houthi warning to resume the flow of humanitarian aid into Gaza. The Houthi threat since late 2023 has severely curtailed international shipping lanes in the Red Sea, impacting the global economy. The Trump administration says its campaign has set out to put an end to that. The US' "economic and national security has been under attack by the Houthis for too long", Washington says. And rising shipping rates, as a result, have probably increased global consumer goods inflation by 0.6-0.7pc, according to the White House. The diversion of oil and LNG flows has been stark (see charts). Trump's message to the Houthis is that their "time is up". Although Trump's predecessor, Joe Biden, also carried out air strikes against the group, observers say the latest attacks are not just more of the same. "Is this a different campaign? 100pc it is," says Mohammed al-Basha, founder of the US-based Basha Report security advisory. Some sites targeted in the Houthi-held capital Sana'a are "a first", he says, signalling that the Houthi leadership is now firmly in Washington's crosshairs for the first time since 2015, he says. The current campaign is also more proactive than the strikes that took place last year, says general Joseph Votel, a former commander of US Central Command, which is overseeing the attacks. "Last year, our approach was more defensive, and focused on protecting ships passing through the area," he says. But this campaign is larger in scope, more geographically dispersed and more intense. Votel says the Trump campaign is more "counter-terrorism focused", which indicates a more targeted and sustained approach to degrade Houthi capabilities and put pressure on its network. Also, there is a subtle change in the strategic messaging, according to Votel. While the Biden administration mostly focused on preventing an expansion of the regional conflict, the Trump administration is making clear that its focus is on "restoring freedom of commerce and navigation". While slight, this change "takes us from a defensive posture to an offensive one", he says. Threats and opportunities Arguably, the biggest distinction between the two strategies is the degree to which Iran, the Houthis' main backer, appears to have featured in the administration's calculations before launching this latest campaign. "The hundreds of attacks being made by [the] Houthis… all emanate from, and are created by, Iran," Trump wrote via his social media platform on day three of the strikes, by which point the Houthis had claimed two retaliatory attacks on the USS Harry S Truman aircraft carrier in the Red Sea. "Every shot fired by the Houthis will be looked upon, from this point forward, as being a shot fired from the weapons and leadership of Iran, and Iran will be held responsible, and suffer the consequences, and those consequences will be dire!" This kind of tough-talking rhetoric is in keeping with Trump's strategy of applying pressure on Iran's leadership to the point that it has no choice but to negotiate the future of its nuclear programme, and ideally, more than that. "It's very clear the US wants to see sweeping concessions from Iran on the nuclear file, on the regional proxy file, and probably the missile and drone programme," says Gregory Brew, senior analyst at US consultancy Eurasia Group. "Trump ultimately wants a deal. But he also wants to look tough and push the Iranians into a deal that aligns with his maximalist view." After Iran's other regional proxies — Gaza-based Hamas and Lebanese Hezbollah — saw their capabilities heavily degraded at the hands of Israel last year, the Houthis are one of the last remaining pieces in what Tehran calls its regional ‘Axis of Resistance'. In a letter sent to Iran's supreme leader, Ayatollah Ali Khamenei, earlier this month, Trump says he encouraged Iran's ultimate decision maker to "make a deal" or face military action. Iran has since confirmed receipt of the letter, but is yet to formally respond, with foreign minister Abbas Araqchi saying this week that its contents are still being evaluated. "Trump's letter is mostly a threat, but he also claims it has opportunities. We are evaluating it and paying attention to all points," he says. Iran's response "will not take long", Araqchi says. But the mood music coming out of Tehran over the past two weeks has not been positive. "You've had Khamenei's tough rhetoric, laying out a tough line for everybody that [they] are not going to talk to the US," Brew says. But "Araqchi and others have clarified that what they are really pushing back against is the sense of talking under pressure. They don't want to appear as if they are succumbing to Trump's pressure. They do want to talk, but from a position of relative strength". Carrot and multiple sticks So long as Washington continues to turn the sanctions screw on Iran — just this week the Treasury for the first time imposed sanctions on a small Chinese refiner over its purchases of Iranian crude — prospects for de-escalation, or nuclear diplomacy, look slim. This raises the question — what next? For now, Trump's inferred threats of military action against Iran look premature, says Arman Mahmoudian, a research fellow at the Global and National Security Institute, especially in response to Houthi actions. Trump seems to be "employing a Reagan-era ‘peace-through-strength' strategy… focused on demonstrating force, particularly by targeting the Axis of Resistance, which is currently in a fragile position", Mahmoudian says. "By launching the strikes, Trump is signalling he has both the capability and willingness to escalate if necessary. That said, I feel his ultimate goal is negotiations, not full-scale war." Brew agrees, describing the Houthis as "an easy target". They "have been redesignated a terrorist organisation [by the US] and are in an entrenched position. So bombing them gives this administration the chance to look tough, and appear to be applying pressure on Iran, without having to take action directly". But if Washington expects such military action against the Houthis to trigger a change in posture or behaviour from the Iranians, they might be disappointed. "The Iranians won't really care if the Houthis are getting bombed. [The group has shown] over the years that they can absorb these kinds of attacks," Brew says. "But also, Iran doesn't have the same influence over, or relationship with, the Houthis as it does Hezbollah or the Shia militias in Iraq." The commander-in-chief of Iran's Islamic Revolutionary Guard Corps has suggested as much, insisting this week that the Houthis "make their own strategic decisions" and that Iran "has no role" in determining their policies or activities. With both sides seemingly keen to talk, a return to negotiations in the not-too-distant future cannot be ruled out. But the sudden escalation of tensions in the Mideast Gulf region, following the collapse of the ceasefire in Gaza, will almost certainly make things more difficult than they already were. Oil flows through Suez Canal LNG flows through Suez Canal Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
Opec+ overproducers outline new compensation plans
Opec+ overproducers outline new compensation plans
London, 21 March (Argus) — Seven Opec+ members have submitted plans to the Opec secretariat detailing how they intend to compensate for producing above their crude production targets since January 2024. The plans show that Iraq, Kazakhstan, Russia, the UAE, Kuwait, Oman and Saudi Arabia will reduce their combined output by an average of 263,000 b/d over the 15 months to June next year (see table) . This is to compensate for exceeding their production targets by a cumulative 4.203mn b/d between January 2024 and February 2025. This figure does not represent a monthly average, but rather the sum of the monthly volumes by which the group's overproducers have surpassed their respective output ceilings. It works out to an average monthly overproduction of 300,000 b/d in the same period. If implemented fully, these compensation related cuts would partly offset a plan by these seven members plus Algeria to return 2.2mn b/d of voluntary production cuts starting in April over 18 months. In fact, the scheduled output increases for April and May would be entirely wiped out. But there is no guarantee the compensation related cuts will be delivered. Some members, Iraq and Kazakhstan in particular, have largely failed to deliver on past commitments to reduce output to below their production targets. By Aydin Calik Opec+ overproduction compensation plan* Iraq Kuwait Saudi Arabia UAE Kazakhstan Oman Russia Total Mar-25 116 15 38 5 25 199 Apr-25 116 8 9 5 53 7 51 249 May-25 135 15 6 10 57 10 76 309 Jun-25 130 23 10 72 12 102 349 Jul-25 120 30 10 66 14 127 367 Aug-25 115 38 10 81 18 152 414 Sep-25 120 27 10 85 20 173 435 Oct-25 120 10 90 13 233 Nov-25 120 20 84 224 Dec-25 120 20 49 189 Jan-26 123 33 39 195 Feb-26 123 33 38 194 Mar-26 123 33 40 196 Apr-26 123 50 38 211 May-26 125 55 42 222 Jun-26 125 56 36 217 Average reduction 262.7 *the amount by which members pledge to produce below their existing targets each month Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
Canada needs more oil pipelines: PM Carney
Canada needs more oil pipelines: PM Carney
Calgary, 20 March (Argus) — Canada needs to build more oil pipelines to reduce its dependence on foreign supplies while opening up new trade corridors for exports, prime minister Mark Carney said today, amid an escalating trade war with the US. "It's about getting things done. It's about getting, yes, getting pipelines built, across this country, so we that can displace imports of foreign oil," Carney said while in Edmonton, Alberta. A US-triggered trade war has sparked an urgent need across Canada to diversify its trading partners and limit the country's reliance on the US. This has lifted public support for getting pipelines and other infrastructure energy projects built. The prime minister envisions the federal government "using all of its power" and new legislation to expedite such projects, adding "additional levers" will be discussed when he meets with provincial premiers on 21 March. "We need to do things that had not been imagined or had not been thought possible, at a speed we haven't seen before," said Carney. "That's the nature of the time." TC Energy's current chief executive along with 13 other executives from the country's largest oil and gas companies urged the federal government this week to declare a "Canadian energy crisis" to expedite infrastructure projects. General election soon Carney is expected to call a general election soon with his Liberal party riding high in the polls. Despite the Liberals' recent track record on energy infrastructure, Carney is looking to appeal to Alberta voters eager for pipelines who typically vote for the rival, pro-oil patch Conservatives. A combined C$280bn ($194bn) of Canadian oil and natural gas projects have been cancelled over the past decade, according to the Canadian Association of Petroleum Producers. Of this, C$164bn in the form of LNG projects, C$63bn in pipeline projects, C$30bn in oil sands projects and C$22bn in refinery projects. TC Energy's 1.1mn b/d Energy East pipeline is commonly referenced by industry as a nation-building project that, proposed in 2013, would have supplied Albertan oil to eastern Canada but was abandoned because of changing regulations. There was still no clear indication of when a decision by the federal government could be obtained when TC Energy cancelled it in 2017. Energy East would have piped oil as far east as Irving Oil's 320,000 b/d refinery in Saint John, New Brunswick, which relies on foreign imports, while also giving shippers an outlet to export to Europe and beyond. Canada imported 490,000 b/d of crude in 2023, according to the Canada Energy Regulator (CER). Of this, 355,000 b/d came from the US, 63,000 b/d from Nigeria and 53,000 b/d from Saudi Arabia. Canada meanwhile produces about 5mn b/d, sending about 80pc of that to the US. Carney's infrastructure push includes the proposed Pathways Alliance project in Alberta, which entails a C$16.5bn carbon capture and storage hub that could remove up to 22mn t/yr of CO2 by 2030. Generally, Carney wants to pursue energy and trade corridors and trade including potentially from Alberta to either the Canada's Arctic coast in Nunavut or to Hudson Bay via Churchill, Manitoba. Or both. The subject of trade and pipelines was front and center during a meeting with Alberta premier Danielle Smith earlier in the day, who has criticized the federal Liberals for years. "Albertans will no longer tolerate the way we've been treated by the federal Liberals over the past 10 years," said Smith in a statement, adding a specific list of demands, including "unfettered oil and gas corridors to the north, east and west". The Nunavut project, called the Grays Bay Road and Port Project, is a proposed deepwater port that would cater to critical mineral exports. The proponent, West Kitikmeot Resources, told Argus earlier this month that it had not yet had discussions with Alberta about developing crude capabilities. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
