Canadian oil exports to surge amid Opec+ cuts

Shipments are expected to reach 11 million barrels next month, the second-highest on record

Pipelines near Fort McMurray in Alberta, Canada. More oil is to be freed up for shipment to buyers in Asia and Europe. Reuters
Powered by automated translation

Canadian crude exports from US Gulf terminals are set to soar in October as production cuts by Saudi Arabia and Russia stoke overseas demand, while US refinery maintenance means more of the oil has been freed up for shipment.

Shipments are expected to reach 11 million barrels next month, the second-highest on record, according to traders involved in the market.

That is an almost sixfold jump from exports in September. Volumes have soared as refineries in the US, typically the biggest takers of heavy Canadian crude, carry out planned maintenance and consume less oil, freeing up more barrels for buyers in Asia and Europe.

Less demand from US refineries coincides with the end of maintenance season at oilfields in Alberta, western Canada, increasing output that was down for part of summer.

The extra volume comes amid a supply squeeze around the world after Saudi Arabia and Russia curtailed production, upending flows and boosting Canadian oil prices.

Canadian crude this week hit the narrowest discount to Nymex West Texas Intermediate futures in two months, according to Link Data Services.

Oil sands barrels, produced in landlocked Alberta, reach the water through an intricate web of pipelines that cross the US to ports in Texas, and from there is shipped to refineries in China, India and Spain.

The oil, heavy and sulphurous in quality, is a favoured type by US fuel makers.

BP’s Whiting refinery, one of the largest users of Canadian oil in the US, will curtail intake amid maintenance that is expected to last until late October.

Barrels loaded in October start to arrive in India in November, when the country celebrates Diwali, the festival of lights that drives consumer spending and fuel consumption.

Updated: September 24, 2023, 3:30 AM