CVX, OXY, XOM: China Is Top Buyer of Canadian Crude Oil Via the Trans Mountain Pipeline

Move over America. Less than two months after U.S. President Donald Trump announced sweeping import tariffs on more than 150 nations, China has emerged as the top buyer of Canadian crude oil via the country’s expanded Trans Mountain pipeline.

President Trump has imposed steep tariffs on both Canada and China, including, at one point, an additional 10% duty on crude oil and natural gas entering the U.S. from Canada. Tariffs on most Chinese products had been as high as 145% but have since been ratcheted down to 30%.

While the U.S. tariff policy continues to be fluid and shift from day-to-day, one of the immediate results has been to forge closer energy ties between China and Canada. The shipment of crude oil to China from Canada has been helped by the expansion of the massive Trans Mountain pipeline last year that carriers crude oil to Canada’s west coast for shipment to Asia.

By the Numbers

China is the top customer for Canadian crude oil shipped via the Trans Mountain pipeline. Canada is now shipping an average of 207,000 barrels per day (bpd) of crude oil to China, up dramatically from 7,000 barrels per day a year ago. The U.S. is currently taking about 173,000 barrels per day of crude oil from the Trans Mountain pipeline.

Canada is the world’s fourth-largest oil producer, but its main oil-producing province of Alberta is landlocked with limited access to coastal ports. The bulk of Canadian oil – about four million barrels per day – is still exported to the U.S. via pipelines that run north-south between the two countries.

Both Canada and China have sought to diversify their energy products and trade away from America due to President Trump’s evolving policies and aggressive rhetoric towards each country. The end result could have negative impacts for major U.S. oil producers such as Chevron (CVX), Occidental Petroleum (OXY), and Exxon Mobil (XOM), among others.

Is CVX Stock a Buy?

The stock of Chevron has a consensus Moderate Buy rating among 18 Wall Street analysts. That rating is based on 10 Buy, six Hold, and two Sell recommendations assigned in the past three months. The average CVX price target of $158.88 implies 11.97% upside from current levels.

Read more analyst ratings on CVX stock