Canada’s oil industry is thriving as it pushes into Asian markets in a bid to reduce its reliance on US sales, defying some analysts’ fears that a surge of Venezuelan barrels on to global markets could undercut demand for its similar crude.
Canadian companies are pumping record volumes and boosting shareholder returns in spite of weak global oil prices. Their decades of proven reserves also mean they are well positioned to benefit from a slowdown in efforts to decarbonise global energy markets, analysts say.
But trade tensions with the US — amplified by President Donald Trump’s threat on Saturday to impose 100 per cent tariffs on all Canadian goods — are accelerating Ottawa’s efforts to diversify its export markets.
This month Prime Minister Mark Carney visited Beijing, where he touted “building a new strategic partnership” with China. Speaking at Davos last week, he warned of a “rupture” in transatlantic relations and promoted Canada as an “energy superpower”. Carney is due to visit India shortly.
Oil production hit a record 5.19mn barrels per day in the first six months of 2025, up from 5.13mn b/d in 2024, according to Canada’s energy regulator.
Sales to China more than quadrupled to 88.7mn barrels last year, according to shipping data analysed by the Baltic and International Maritime Council; US oil exports to China fell 61 per cent in the same period to 39mn.
The surge comes after the opening of the Trans Mountain Extension pipeline in May 2024, which enabled Canadian crude to flow from Alberta’s oilfields to the west coast for export to Asia.
“It’s an excellent time for Canadian oil sands,” said David Chelich, global head of energy and diversified industries at the Toronto Stock Exchange. “We’re now getting our oil to China, South Korea, India.”
Analysts say geopolitical turmoil has strengthened the province of Alberta’s position as a stable energy supplier while enhancing the case for building an additional pipeline to Canada’s west coast to serve Asia.
Shares of Canadian oil producers are nearing decade highs. In December the four largest Canadian oil majors — Suncor Energy, Canadian Natural Resources, Imperial Oil and Cenovus — delivered upbeat investor presentations, outlining plans for a combined $19.5bn capital expenditure and increased output this year.
Canada mainly produces viscous oil with high sulphur content, which is similar to Venezuela’s Merey crude. That makes them close competitors for the specialised refineries that can process their output.
The vast majority of Canadian oil is exported to the US, where almost 70 per cent of refining capacity is designed primarily to handle its heavy grades. Until last month, Caracas was shipping most of its 900,000 b/d to refineries in China.
The toppling of Venezuela’s strongman leader Nicolás Maduro this month by the US caused a brief dip in Canadian producers’ share prices amid concerns the Caribbean nation’s barrels would displace Canada’s in the American market. But they have since rebounded because analysts expect any rise in Venezuelan exports to be modest in the short term.
Enverus, an energy consultancy, estimates that the Caribbean nation could boost production by 500,000 b/d by 2035. “That’s a slight negative for Canadian producers, but not catastrophic,” said Dane Gregoris, an analyst at Enverus.
But amid continuing trade tensions with Washington, Canadian producers and politicians are intensifying efforts to build more pipe capacity to Canada’s west coast to expand exports to Asia and other destinations beyond the US.
Alberta’s premier Danielle Smith posted on X in early January that a proposal to run a pipeline to the north-west coast of British Columbia would be submitted by June “at the latest” and hopefully approved no later than this autumn.
Lisa Baiton, president of the Canadian Association of Petroleum Producers, said: “Canada has a natural advantage for supplying oil and [liquefied natural gas] to Asian markets, with shorter shipping routes and competitive pricing.”
The long lifespan of oil sands drilling projects, typically 40 to 80 years, is tempting some investors to rotate out of US shale assets towards Canadian producers, say analysts.
After more than a decade of breakneck expansion, growth in the US shale industry slowed last year due to a nearly 20 per cent drop in oil prices and a reduction in prime drilling prospects. Canadian oil sands projects can take more than a decade to develop and require large upfront capital investments but they provide decades of stable, long-term production when they come online.
“We are living in a post-frackers world,” said Cole Smead, chief executive of Smead Capital Management, an investment firm with holdings in Cenovus, Imperial Oil, Strathcona and Tamarack Valley Energy. “Investors now value long-lived oil assets.”
Heather Exner-Pirot, director of energy, natural resources and environment at the Macdonald-Laurier Institute in Ottawa, said Canada was a low-risk option for oil buyers in an increasingly uncertain world.
“Canadian producers have a brand of reliability,” she said. “Does Venezuela? It does not.”
Additional reporting by Martha Muir