ANALYSIS: Saudi disruption, European demand highlight need for East Coast oil pipeline

CALGARY — On Tuesday, Saudi Arabia announced that late-September crude oil shipments to Europe were being cancelled due to last week’s drone attacks on its key East-West export pipeline and Yemen’s Houthis taking over the Red Sea coast, putting a new spotlight on Ottawa and Alberta’s plans to move more oil to overseas markets amid an increasingly antagonistic trade relationship with the United States.Sources told Reuters that oil loadings at the Red Sea port of Yanbu had been suspended and that, when the East-West line went down on Friday, the port had approximately five to seven days of crude stocks left for export.The Saudi pipeline had allowed the kingdom to avoid the worst consequences of the months-long closure of the Strait of Hormuz — which previously handled one-fifth of the world’s total oil supply — due to the ongoing Iran conflict.Saudi Arabia blamed the pipeline attack on an Iraqi militia and is expected to begin moving more oil through the Strait of Hormuz using so-called “dark shipments” similar to those employed by the United Arab Emirates and Iraq..The disruptions have sent European buyers scrambling in search of suitable replacement supplies, with Polish energy company Orlen — which receives roughly 40% of the oil processed at its refineries from Saudi Aramco — reportedly seeking alternative oil supplies from the US, Kazakhstan and Algeria, among other suppliers.As European countries continue to hunt for crude from stable suppliers, Canada finds itself in an unusual position, as Alberta possesses one of the largest oil reserves in the world, overall Canadian production is forecast to increase by 865,000 barrels per day (bpd) by 2030, according to BMO Capital Markets, and Ottawa is actively promoting the country as a reliable energy supplier.However, 90% of Canada’s crude exports still go to the United States, leaving Canadian producers with limited ability to respond when buyers elsewhere urgently need oil.In 2025, Canada exported 4.3 million bpd, of which about 3.9 million went to the US, with those shipments valued at $126 billion.That left only about 400,000 bpd for every other foreign market combined — including Europe and the rapidly growing Asian market.The Trans Mountain expansion has improved access to the Asian marketplace via the West Coast, but it recently reached full capacity for the first time since the expansion was completed two years ago. Canada still lacks enough alternative pipeline and marine capacity to redirect a substantial share of the oil currently flowing south..Trans Mountain expansion drives record oil tanker traffic in Burrard Inlet.That limited capacity has become increasingly apparent as the global oil crisis has deepened over recent months.Liberal MP Corey Hogan (Calgary Confederation) and Parliamentary Secretary to the Minister of Energy and Natural Resources Tim Hodgson attended the Asia-Pacific Economic Cooperation Energy Ministers’ Meeting in China last week to promote Canada as a “stable and trusted supplier of choice.” They also held discussions with representatives from China, Japan, South Korea, Singapore and the Philippines.“Canada has an opportunity right now to generate prosperity, diversify trade, secure global energy markets and enhance our sovereignty,” Hogan said in an official statement.“With abundant resources, strong energy expertise and a Pacific coast that connects us directly to global markets, Canada can deliver both conventional and clean energy to the Asia-Pacific region in a way that creates economic opportunity for Canadians and shows how we can give ourselves more than anyone can take away.”.Alberta Premier Danielle Smith’s proposed one-million-barrel-per-day pipeline to the BC coast has been pointed to as part of that effort and is, of course, welcome, but the current European crisis points to another missed opportunity for the energy sector and offers another glaring example of years of federal policies stifling growth and prosperity.If another cross-country pipeline, such as Energy East, had been built, Canada and Alberta could have been in a much stronger position to serve as reliable suppliers to European customers.Energy East would have transported as much as 1.1 million bpd from Alberta and Saskatchewan to refineries in Quebec and New Brunswick, along with a marine export terminal in Saint John.Its proposed capacity was nearly three times the approximately 400,000 bpd Canada exported to every non-US market combined in 2025.However, TC Energy cancelled Energy East in 2017 following political opposition and regulatory uncertainty.In 2025, Canada exported approximately 140,000 bpd to European markets, which represents less than 15% of Energy East’s proposed capacity.While the project would not have guaranteed that all of its oil would go to Europe, an Atlantic export terminal would have given Alberta’s producers direct access to the European market without relying on US pipelines or shipping oil from the Pacific Coast..As a result, while European refiners hunt for oil and physical cargo prices climb above US$120 per barrel, most Alberta crude remains committed to American pipelines and refineries, as well as, increasingly, the Asian market. China, in particular, is the largest buyer of seaborne crude shipped through the Trans Mountain pipeline, accounting for roughly 60% of those exports.However, Smith and Ontario Premier Doug Ford are now attempting to build a new east-west pipeline through the proposed Northern Shield Energy Corridor.That proposal would run approximately 3,300 kilometres from Hardisty, Alberta, to Sarnia, Ontario, initially carrying 500,000 bpd before potentially expanding to 800,000 bpd.But, the current proposal ends in Ontario, and it would need to be expanded to an Atlantic port to provide the direct European access Energy East could have created..ANALYSIS: Ford and Smith's pipeline proposal has a Manitoba problem.While a new pipeline would take years to approve and build, not to mention billions of dollars in funding, the current Saudi disruption has nevertheless strengthened the long-term case for additional Canadian export capacity, especially with regard to export facilities on the East Coast.News of the Saudi disruption comes as Prime Minister Mark Carney travels to Strasbourg, France, to seek what he has described as a “unique security and economic alliance” with the European Union (EU).The EU is already Canada’s second-largest trading partner, with two-way trade in goods and services valued at roughly $178.6 billion in 2025, according to Global Affairs Canada.Europe’s continuing search for secure oil supplies would appear to offer Canada an opportunity to put energy at the centre of those discussions.The question now is whether Carney, who has repeatedly pledged to turn Canada into an “energy superpower,” will act on it.

ANALYSIS: Saudi disruption, European demand highlight need for East Coast oil pipeline

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