Canadian Heavy Oil Emerges as Strategic Asset for Asian Refiners

Canadian heavy oil has emerged as a reliable and strategic asset for Asian refineries following disruptions in the Strait of Hormuz, according to ATB Cormark Capital Markets. The Port of Vancouver's Westridge Marine Terminal now offers an expanded supply of Alberta oil to tankers calling at the terminal, thanks to the Trans Mountain pipeline expansion.

Not only do these barrels have clear sailing to Asian ports, analysts say they're a premium grade that Asian refiners are increasingly seeking. About half the oil flowing through the pipeline is considered 'heavy,' one of the grades most affected by the Strait of Hormuz closure, ATB said.

SAGD oil sands project in northern Alberta, which produces heavy oil, offers a stable supply to counterbalance volatility in global markets, according to Studio.Energy's Carmen Velasquez. The large-scale petrochemical refineries in Asia that are driving oil demand growth can pair well with Alberta's heavy oil.

China is Asia's 'heavy oil hub,' and the country has invested heavily in new mega-refineries to handle heavier crude slates, RBC director of energy policy Shaz Merwat said. India too is expected to see oil imports grow 1.5 million barrels per day by 2035 as both countries seek steady supplies of heavy and sour crude.