Without new export routes to Asia, Canada risks weaker job growth, less money for public services and a higher cost of living
Key points
- Canada sends most of its oil to the United States, leaving the country exposed to price swings or political interference.
- That exposure matters more now because global oil prices are being driven by geopolitics, not by how much oil is being produced or used.
- Major producers like OPEC+ are responding cautiously to market conditions, which adds uncertainty instead of predictability.
- Canada has begun exporting more oil beyond the United States through the Trans Mountain expansion, but the volumes are still too small to change its bargaining position.
- Without new export routes to Asia, Canada earns less for its oil because it sells most of its oil to a single dominant buyer.
Canada’s failure to build sufficient oil export infrastructure has left the country dangerously dependent on the United States. Global oil market shifts now make clear why expanding trade routes beyond U.S. borders is an economic necessity, not a policy option.
Crude prices jumped last week, closing at almost a six-month high. Brent closed at US$70.69 a barrel, close to the six-month high of US$71.89 it reached just a day earlier on Thursday. West Texas Intermediate also closed at US$65.21 a barrel, down 21 cents or 0.32 per cent.
Market indicators continue to point to a possible glut in 2026, making the price spike earlier in the week an exception rather than a change in direction. The price increase was not driven by fundamentals but by geopolitics. Such spikes rarely last over the short to medium term.
The Organization of Petroleum Exporting Countries and its allies in the expanded OPEC+, which includes heavily sanctioned Russia, responded by holding production steady. At a meeting on Sunday, it left output unchanged for March.
More supply could have pushed prices down, but many producers need higher prices to pay their bills. Push prices too high, though, and political pressure quickly follows, especially from U.S. President Donald Trump in a midterm election year.
If prices rise, OPEC+ can increase supply under its existing plans. If prices keep falling, as they did on Friday, the group will need to tread carefully.
“Oil prices remain stuck in a narrow band even after soaring 15 per cent in January, partly on fears of a fresh U.S. strike on Iran. Tough talk on either side is unlikely to push crude prices much higher, given today’s well-supplied market. What would be needed is big-time action that results in a meaningful, sustained hit to the global supply-demand balance,” Reuters market analyst Ron Bouss wrote.
For Canada, that volatility carries greater risk. The country’s oil sector faces a clear test of whether recent diversification gains can be sustained. Recent data suggest trade diversification is beginning to show results. The share of Canada’s crude flowing to countries other than the U.S. reached an all-time high in November, surpassing the previous month’s record, as the Trans Mountain pipeline expanded access to new markets, Jason Kirby, an economics columnist, wrote in The Globe and Mail.
Canada shipped 14.1 per cent of its crude to the rest of the world in November, with China accounting for 10 per cent of total exports that month. Historically, about 97 per cent of Canada’s oil exports have gone to the U.S., leaving Canadian producers with little leverage on price or access.
By comparison, non-U.S. exports averaged just three per cent of total crude exports in 2023. In May 2024, the expanded Trans Mountain pipeline moved its first shipment from Alberta to the West Coast, fuelling export growth to Asia and other markets. Capacity rose to about 890,000 barrels per day, but that still represents only part of Canada’s total production. It does not solve the problem.
Reaching markets in Asia and elsewhere requires infrastructure to move oil from Alberta to B.C. ports. That remains politically contested, particularly in British Columbia. Canada will have to confront resistance from the B.C. government and some Indigenous groups if it wants to reduce reliance on a single customer. This matters because Asia is driving most global oil demand growth, led by countries such as China and India.
Alberta Premier Danielle Smith has clashed with B.C. Premier David Eby over the issue. In June, Eby said he would not support another pipeline, arguing the Trans Mountain Expansion Project already addresses the need.
On Jan. 29, Prime Minister Mark Carney and Smith indicated they are open to alternative routes to move additional oil from Alberta to Asian markets, routes that would not necessarily terminate on B.C.’s northwest coast.
“Some of the alternatives are already emerging,” Smith told reporters in Ottawa on Thursday, when asked whether the northwest coast route was the only option under consideration.
She said several ideas are being examined, including expanding Enbridge’s main line and finding ways to better utilize existing Keystone assets.
With pressure from the U.S. intensifying, multiple options are now on the table to increase crude shipments from Canada to Asia. The question is whether those options remain ideas or turn into construction.
If Canada fails to act, it will stay a price-taker tied to a single buyer in an increasingly unstable global market. Expanding export infrastructure is no longer about ambition or politics. It is about economic leverage, resilience and avoiding another decade of missed opportunity.
Toronto-based Rashid Husain Syed is a highly regarded analyst specializing in energy and politics, particularly in the Middle East. In addition to his contributions to local and international newspapers, Rashid frequently lends his expertise as a speaker at global conferences. Organizations such as the Department of Energy in Washington and the International Energy Agency in Paris have sought his insights on global energy matters.
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