TCI Energy Brief: One Year In, China is the Largest Purchaser of TMX Oil, Demonstrating the Viability of Canadian Energy Exports to the Asia-Pacific

The completion of the Trans Mountain Expansion (TMX) pipeline in May 2024 has coincided with the beginning of a new era in global trade. Fueled by escalating US trade tensions and tariff policies that underscore Canada’s heavy dependence on a single market for its oil exports, TMX’s significance as a strategic gateway to the Asia-Pacific region is increasing, and China is emerging as Canada’s fastest-growing new crude export destination.

Canadian crude shipments to China have experienced a remarkable, continuing surge, a volume increase that outpaces price volatility and signals a genuine shift in trade patterns. Notably, TMX has helped narrow the longstanding price discount US refineries pay for Canadian oil, boosting producer revenues and enabling Canadian crude to fetch higher prices in global markets, including in China. Broader geopolitical factors have also strengthened Canada’s appeal as a reliable, competitively priced alternative supplier for China.

Marking the first full year of TMX operations, this report analyzes these trends and also assesses operational challenges facing the pipeline’s export capacity, the economic implications of global oil market volatility, and the broader political implications for Canada regarding diversification. We conclude that TMX is not only reshaping Canada’s energy export landscape but providing an opportunity for the country to enhance its diplomatic profile and relevance in the Asia-Pacific.

Strong and Sustained Canadian Crude Oil Exports to China

Since May 2024, Canadian oil exports to China have grown consistently. China's critical need for energy imports and strategic efforts to diversify its own supplier base have positioned Canada as a desirable new supplier. After an adjustment period from May to September 2024, shipments surged from October 2024 onwards, with average monthly export value jumping 123% from C$247 million to C$511 million between May-September 2024 and October 2024-March 2025.

One might assume that rising oil prices drove this dollar-value export surge, but the data tells a different story. Canadian crude shipments to China are priced relative to ICE Brent, which averaged US$80.71 from May to September 2024 before declining to US$75.21 from October 2024 to March 2025. Despite this drop, export volumes grew significantly, indicating genuine volume growth rather than price-driven increases.

Our analysis^[1] confirms this sustained growth from October 2024 onward. TMX crude exports to China have exhibited a clear and impressive growth trend in the last year, from 25,040 bpd in May 2024 right after pipeline completion, to a record high of 353,674 bpd in March 2025, the most recent month for which we have available data. To further put this into context, these March numbers already represent 16.3% of Russia’s total crude exports to China in 2024, with some room for more growth remaining notwithstanding the limitations imposed by current infrastructure capacity.

Source: Statistics Canada, Macrotrends, S&P Global

Rising Canada-China Energy Trade and the Continued Preponderance of the US in Canadian Oil Exports

China has become the second-largest importer of Canadian crude thanks to the TMX pipeline, but the US still dominates, receiving over 90% of Canadian oil exports - around 4 million bpd. TMX has thus also reshaped Canada’s energy ties with the US, boosting shipments to West Coast refineries relative to traditional Gulf Coast and Midwest markets. Since TMX’s May 2024 launch, both the volume and share of exports to the US West Coast have grown, pushing Canadian oil shipments to a record 4.3 million bpd in July 2024.

Source: Statistics Canada

Tariffs are nevertheless having an impact. While exports to the US West Coast did grow, total Canadian oil exports to the US dropped to a two-year low of 3.1 million bpd in March 2025, thanks to the Trump administration’s 10% tariffs on non-USMCA compliant Canadian energy exports. This contrasts sharply with the July 2024 peak of 4.3 million bpd, highlighting the dampening effect of tariffs despite TMX’s increased capacity.

As noted above, March 2025 also saw record Canadian oil exports to China, underscoring a shift toward Asia-Pacific markets amid strained US-Canada energy ties. Beyond China, Canadian crude exports to other Asia-Pacific markets like Singapore (C$210 million) and South Korea (C$104 million) have also risen modestly in early 2025. This supports TMX’s goal of diversifying markets, with China as the dominant player, accounting for 70.6% of TMX oil exports to non-US markets by value in January-March 2025.

Narrowing the Discount: TMX’s Pricing Promise Realized

The Trans Mountain Expansion (TMX) project not only broadens global market access for Canadian oil but also shrinks the significant discount U.S. refineries once paid for Canadian crude, a byproduct of Canada’s previously constrained export capacity.

Since TMX’s completion in May 2024, the price gap between Western Canadian Select (WCS) and WTI has narrowed. From May-December 2023, WCS traded at a US$17.69 discount to WTI; over the same period in 2024, the gap shrank to US$12.88, a 27.19% reduction, boosting Canadian producers’ revenues by nearly US$10 billion. By April 2025, the discount on some spot shipments to the US dropped further to just US$9.00.

Canadian crude sold to China is priced against ICE Brent, a higher benchmark than WTI. Although Chinese buyers still receive a US$2-$6 discount per barrel, producers earn more per barrel compared to US sales. Thanks to TMX’s ability to bring crude to other major economies, Canadian oil is now fetching better prices both in the US and globally, particularly in China.

Positive Momentum in Canadian Oil Export Diversification Driven by Geopolitical Shifts and growing Political Consensus

A new political consensus may also be emerging across Canada, with growing support for expanding the country’s oil export infrastructure and capacity. Oil exports account for 14% of Canada’s total exports and approximately 4% of GDP, with over 90% going to the US.

Current emerging export trends point to the attractiveness of Canadian crude in Asia-Pacific markets. This may lead to a revisiting of potential infrastructure upgrades that would boost TMX’s capacity by 200,000-300,000 bpd and even possibly revive the proposed Northern Leg project, adding another 300,000-400,000 bpd in export capacity to Pacific ports.

As Canada seeks to reduce its dependence on supplying an increasingly volatile US market, China, as a customer, is doing the same. Amid escalating US-China trade tensions, Chinese imports of American oil plummeted by 90%, while Canadian oil exports to China hit record highs. This alignment of interests - sparked by the Trump-era trade war - has bolstered Canada’s profile as a viable alternative energy supplier for China, creating strong momentum for future energy trade between the two nations.

Canada’s oil exports to China are also benefiting from broader geopolitical tailwinds. The Trump administration’s renewed “maximum pressure” campaign on Iran has led to US sanctions on several Chinese refineries for buying Iranian crude, prompting a drop in China’s Iranian oil imports. A similar pattern has emerged with Chinese purchases of Venezuelan crude. In contrast, Canadian crude presents a reliable, competitive, and politically safer alternative. With Washington’s hardline stance on both Iran and Venezuela likely to endure, this trend is expected to continue, further strengthening Canada’s position as a desirable supplier.

Operational Challenges and Market Headwinds Facing TMX Pipeline Utilization and Canadian Oil Exports to China

Some challenges remain, as TMX continues to face hurdles limiting its export potential. Logistical bottlenecks at the Port of Vancouver have restricted tanker loading, but new navigational aids enabling nighttime access are set to boost shipping capacity. High toll rates continue to hinder TMX’s competitiveness, with utilization at 76% in December 2024 - well below near-full use of pipelines like Enbridge Mainline. A judicial review of tolls planned for late 2025 could lower rates, potentially improving TMX’s utilization.

The recent decision by OPEC+ to triple its planned oil output increases for the foreseeable future, combined with the looming threat of a global recession triggered by ongoing trade tensions, could also pose a significant short-term challenge for Canadian crude exports to China. The move by OPEC+ to flood the market with far more oil than anticipated came as a surprise to many, given the current global macroeconomic uncertainty, and has contributed to the recent declines in oil prices, with many experts expecting this trend to continue.

A sustained period of lower oil prices would be a significant headwind for Canadian crude exports. A potential silver lining, however, is that Canadian oil producers operate with increasingly efficient cost structures. Break-even prices are significantly lower than even the most pessimistic forecasts, as low as the mid-US$40 range, which may offer a degree of resilience and even competitiveness amid these challenging conditions.

A Strategic Window for Canada’s Energy Future

Since the Trans Mountain Expansion (TMX) pipeline became operational in May 2024, Canada has seen a significant boost in its crude oil exports to China, both in volume and value, despite a backdrop of declining global oil prices. This surge has positioned China as Canada’s second-largest oil importer, signaling a meaningful step toward diversifying Canada’s energy markets beyond its traditional reliance on the United States. These exports in areas of critical need have the potential to elevate Canada’s diplomatic relevance in Asia by fostering stronger economic ties with key regional players.

The TMX’s ability to connect Canadian oil to international markets has demonstrated its potential to attract global buyers and secure more competitive pricing, narrowing the price differential that once constrained Canada’s market reach.

With data continuing to point to unprecedented export volumes to China, the pipeline’s performance validates the need to carefully consider the possibility of further expanding Canada’s energy footprint in Asia via enhanced infrastructure and increased capacity. Opportunities in liquefied natural gas (LNG) add another dimension to this strategy, with projects like LNG Canada, set to begin exports by late 2025, poised to also capitalize on China’s demand for hydrocarbons. With Chinese LNG imports from the US collapsing amidst ongoing trade frictions, Canada may also soon find itself uniquely positioned in this sector as well. The new Carney government’s repeated statements signalling its desire to position Canada as an energy superpower provide a clear opportunity for reassessment of the variables underpinning Canada’s future energy posture.

[1] To estimate daily Canadian crude exports to China, we used the highest known discount of $6 per barrel off ICE Brent prices to calculate a conservative average price. Monthly export values from Statistics Canada (in USD) were divided by this price, then by the number of days in each month, yielding daily estimates. While imperfect and provided in lieu of official data, the results align closely with trendlines available in Statistics Canada and other incomplete data, supporting its reliability.