Canada’s Trans Mountain pipeline has found a major market for its crude oil in China, adding to the California crude market, which has been the largest buyer of crude from the Canadian oil giant over the past years, recent data shows. 

This new shift follows the completion of the Trans Mountain Pipeline Expansion in May 2024, marking a new beginning for Canada's oil industry. And now, a significant portion of the increased export capacity flows east to China rather than the U.S., which has been undoubtedly the major market for TXM's products. 

Early data indicates that Chinese buyers are increasingly purchasing Canadian crude shipped via the TMX, a major pivot away from a historical reliance on the U.S. market for the lion's share of crude exports from Canada. And with the pivot come a host of benefits, both in better prices for Canadian oil and more bargaining chips in trade deals with the United States. 

The TMX pipeline, once expanded, would almost triple export capacity from Canada's Pacific coast to allow exports of up to 890,000 barrels a day. While the U.S. is still the largest market for the commodity, China has emerged as a strong buyer of the commodity in the past months, having imported C$2.03 billion, about US$ 1.4 billion of Canadian crude, between May to November 2024.

This apparently goes against earlier analyst expectations that the majority of TMX-sourced oil would find its way into refineries in California. The quality of Canadian crude is particularly well-suited for Chinese refineries, plus it's easier to access than Middle Eastern oil, geopolitically. 

This heightened export diversification has translated into improved prices for Canadian oil, with producers probably earning $5.00-$6.00 more per barrel for crude shipped via TMX compared with overland shipments to the U.S. 

In addition, TMX is a strategic tool that enhances Canada's diplomatic heft. It has helped Canada reduce its economic overdependence on the U.S. and increase its influence in the Indo-Pacific region.

However, there are still a few challenges to overcome: high tolls on the TMX pipeline, and limited port capacity at Port of Vancouver, leave little room to fully utilize this expanded export capacity. Nevertheless, the TMX pipeline still provides a great opportunity for the diversification of the energy markets of Canada and hence its global economic resilience.