Ongoing shipping risks in the Strait of Hormuz are making Canadian heavy oil more attractive to global buyers, especially refineries in Asia built for heavy sour crude. RBC analysts note that Asian refineries have been force-feeding light sweet American barrels as a stopgap, but those refineries need heavy oil to run efficiently. Canada, one of the world's largest heavy oil producers, is now in a stronger position to supply that demand thanks to the Trans Mountain pipeline expansion now in service. For carbon markets and climate policy, this raises a key question: does replacing Middle Eastern heavy oil with Canadian heavy oil reduce or increase lifecycle emissions? Canadian oil sands production is generally more carbon intensive than conventional Middle Eastern crude. If Canadian exports displace Iranian or Saudi barrels, the net emissions impact depends on production methods, transport distances, and refinery configurations. Policymakers and carbon credit project developers should watch how this trade shift affects the carbon intensity of the global oil supply mix.
