Canadian Oil Expands Deep Into U.S. Gulf Coast Market

U.S. Gulf Coast Refiners Absorb More Canadian Heavy Crude

While Venezuelan supply is rising, it remains somewhat uncertain. Meanwhile, domestic surges in Permian Basin production offer only a partial substitute because much of that output is lighter than the heavy grades many Gulf Coast refineries were specifically designed to process.

Enbridge’s Houston Oil Terminal (EHOT), which began operations in July, provides Canadian oil sands producers with direct access to these heavy, sour crude processing plants and export docks. Gulf Coast refinery cluster “boasts the greatest concentration of heavy, sour crude processing capacity anywhere in the world.” Many of these facilities were originally built to run heavy grades from Venezuela and Mexico, making them a natural fit for Canadian barrels.

Midwest Dominates Trade While Gulf Coast Volumes Shift

The U.S. Midwest remains by far the largest regional market for Canadian crude, absorbing an average of 2.75 million barrels per day in 2025 and roughly 2.92 million barrels per day during the first half of 2026, based on data cited by Oilprice.com. By comparison, the Gulf Coast operates as a smaller market for Canadian barrels despite housing the country’s largest refining center.

This represents a decline from 526,000 barrels per day in 2024. To counter this drop and push more volume into the region, Enbridge plans to expand the storage capacity at the Houston Oil Terminal from 2.5 million barrels up to 15 million barrels.

Pacific Route Expands Export Options to Asia

While U.S. pipelines continue to carry the vast majority of production, Canada is simultaneously expanding capacity along its Pacific route. The Trans Mountain expansion nearly tripled pipeline capacity to 890,000 barrels per day when it entered service in the second quarter, hitting full capacity for the first time in June according to Reuters reporting cited by Oilprice.com.

Trans Mountain plans to add another 90,000 barrels per day of capacity in the fourth quarter, followed by an additional 210,000 barrels per day by the end of 2028. Most of this incremental crude is expected to head toward Asian markets, diversifying Canada’s export destinations beyond North America.

Energy Explicitly Exempted From Trade Retaliation

Oil has so far been kept outside the escalating bilateral trade conflict between the U.S. and Canada. The Canadian duties target manufactured goods, including steel, dairy, appliances, agricultural equipment, pulp, paper, and electronics.

The White House explicitly excluded energy, potash, and critical minerals from its 50 percent tariffs, leaving the cross-border crude trade untouched by the latest trade measures. This carve-out preserves the integrated energy infrastructure built between the two nations over the past 70 years.

Frequently Asked Questions

How much crude does Canada export to the United States?

Canada exports roughly 80 percent of its crude oil output to the United States. U.S. imports of Canadian crude averaged just over 4 million barrels per day during the first half of 2026, according to the Canada Energy Regulator and Oilprice.com.

Why are U.S. Gulf Coast refiners buying more Canadian heavy oil?

Gulf Coast refiners are turning to Canadian barrels as Mexican oil production declines and Middle Eastern shipments face shipping disruptions. While Venezuelan supply is rising, it remains somewhat uncertain, and domestic Permian Basin output is generally too light for complex heavy-crude refineries.

Are energy products affected by the U.S.-Canada tariffs?

No. The White House explicitly exempted energy, potash, and critical minerals from its Section 338 tariffs, leaving the cross-border oil trade outside the escalating trade dispute.

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