For decades, Canadian oil exporters have only had one destination: south of the border. Yet things are changing. There’s a new big buyer in town, and it’s buying a lot: China. Canadian crude oil flows abroad began to change direction earlier this year, after the trade dispute ignited by U.S. President Trump prompted exporters to seek new markets, conveniently made more easily accessible by the expanded Trans Mountain pipeline. The pipeline went into operation with its new capacity of 890,000 barrels dail ...

Core Insights - The amount of oil in transit has reached 1.2 billion barrels, the highest level since 2016, indicating an oversupply situation in the market [2][3] - China is significantly increasing its oil storage capacity, with plans to build 11 new storage sites, adding approximately 169 million barrels of capacity by 2026 [5] - Despite a global oversupply, China is stockpiling crude oil at a rate of nearly 1 million barrels per day, raising questions about its demand strategy [6] Group 1: Oil Supply and Demand Dynamics - The high volume of oil in transit suggests that demand is not keeping pace with supply, as much of the oil is being moved in search of buyers rather than fulfilling pre-existing contracts [3] - The current situation reflects a broader trend of increased production from key oil-producing countries, contributing to the oversupply [2] Group 2: China's Strategic Moves - China's state-owned energy companies are taking advantage of low oil prices to build up inventories, which has been a consistent strategy since early 2025 [4][5] - The new storage capacity being added is significant compared to previous years, indicating a strategic long-term approach to oil procurement [5] - Analysts note that China's stockpiling efforts are occurring despite a lack of domestic demand, suggesting a calculated move to prepare for future supply increases [6]

Group 1 - The discount for Iranian crude oil sold in China has increased to over $6 per barrel compared to Brent, rising from $5 at the beginning of September and $3 in March [1][2] - U.S. sanctions have impacted imports at major oil terminals in Shandong, affecting independent refiners that rely on Iranian crude [2][3] - Sanctions have led to reduced shipments to sanctioned ports, as the U.S. targets Chinese oil terminals and independent refiners [3] Group 2 - High stock levels at import hubs and insufficient government import quotas for independent refiners are contributing to the increased discounts for Iranian crude [4] - Onshore commercial crude stocks in Shandong reached a record-high of 293 million barrels as of August 22, which is 20 million barrels higher than early July [4] - China is accumulating crude inventories at a rate of approximately 1 million barrels per day and may continue to stockpile crude through 2026 if oil prices remain stable [5]