The oil price rally resumed its upward trajectory on Friday after the U.S. Central Command (CENTCOM) 确认的 the sinking of the Singapore-flagged container ship following an Iranian Revolutionary Guard Corps (IRGC) projectile strike in the Strait of Hormuz. 布伦特原油 for December delivery jumped 3.33% to trade at $109.50 per barrel at 2.35 pm ET, while WTI crude for November delivery was up 3.41% to change hands at $101.30/bbl, marking the first time the American benchmark has traded above $100/bbl in a month. However, Canadian crude continues to lag the major benchmarks even as there seems to be no easy fix for the Middle East crisis. To wit, Western Canadian Select (WCS)–the benchmark price for Alberta’s heavy crude–for November delivery in Hardisty, Alberta, settled at $26.40 a barrel below WTI crude on Thursday’s session, with the discount widening from $25.55 on Wednesday and around $10 in mid-September. The discount is now more than $15/bbl wider than it was a year ago. WCS almost always sells for less than WTI for a couple of reasons, the key one being that Alberta’s crude is heavy and sour, with its higher sulphur content making it more expensive to refine than lighter, sweeter Texas oil. A second major reason is simply distance because Hardisty is about 4,000 kilometres from the big refining markets in the U.S. Gulf Coast. Canadian producers are frequently forced to either accept lower prices or turn to more expensive rail shipments whenever pipeline capacity is tight.
However, unlike past price blowouts, the current crisis for Alberta’s producers has got less to do with getting oil out of the province but more about how Gulf Coast buyers are valuing its heavy, sour barrels.
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“In the past when (price) differentials would weaken, often it was because of egress constraints,” Patrick O’Rourke, MD at ATB Capital Markets, told the Financial Post. “Not this time.”
First off, Ukrainian drone and missile strikes have severely damaged Russia’s oil refining capacity, leading to domestic fuel shortages and pushing global diesel prices to record highs. Hardly surprisingly, global refiners are currently favoring lighter, sweeter grades because they yield more diesel per barrel, reducing the appeal of Alberta’s heavy. Second, ongoing geopolitical conflicts have disrupted the global shipping industry, driven up tanker rates and stretched out long-distance voyages to Asia.
O’Rourke says that the market for very large crude carriers (VLCC) is currently the most competitive of any vessel class, with about 5% of the 1,000-vessel global fleet currently out of service. Global VLCC rates have spiked to an all-time high of $805,000 per day in October, about 15x higher than the average rate in recent years. According to Rory Johnston, a Toronto-based oil market researcher cited by the Financial Post, the cost of shipping crude to Asia has exploded, hitting Canadian oil because its final buyers are increasingly in Asia.
“Shipping crude from the Middle East to China normally costs about $3 a barrel,” Johnston told the Financial Post in an interview. “It now costs around $42.”
Third, WCS is now facing increased competition from Venezuela’s crude. As U.S. imports of Venezuelan heavy crude rose following political changes and shifting sanctions in early 2026, U.S. Gulf Coast refineries–which were originally built to process heavy sour crude–found an alternative supply. Whereas Venezuelan barrels trade at a higher price than WCS, the renewed flow of Venezuelan heavy oil into the Gulf Coast increases heavy-crude competition and suppresses pricing power for Canadian producers.
Finally, Canada’s Trans Mountain pipeline expansion–which previously helped ease export bottlenecks–is essentially full, leaving producers with limited flexibility to move extra heavy barrels. The expanded 890,000 barrel-per-day (bpd) pipeline hit maximum capacity for the first time in June 2026, with Canada’s crude output expected to surpass its record 5.3 million bpd this year. Additionally, more Alberta heavy crude loaded at the TMX terminal is now sailing straight to Asia on smaller tankers instead of VLCCs. Before the closure of the Strait of Hormuz, much of it traveled down the West Coast towards California and onwards.
Unfortunately for Canadian producers, the situation is not expected to ease any time soon. TD Cowen recently upgraded its global oil price forecasts due to persistent geopolitical supply risks in the Middle East and exceptionally strong downstream refining conditions. However, the investment bank has predicted that the large WCS discounts will persist in 2027 due to pipeline constraints and rising imports of competing heavy crudes into the U.S. Gulf Coast. Nevertheless, the brokerage maintains a constructive view on Canadian energy equities thanks to higher global benchmarks leaving producers with strong balance sheets and cash flows.
作者：Alex Kimani，来源：Oilprice.com
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