More than half of Canada's crude and condensate demand is being met by the United States, despite the fact that Canada pumps two and half times more oil than its domestic demand, IHS Markit said in a report on Wednesday.
Around 55 percent of the demand for crude and condensate in Canada in 2019, the last 'normal' year for demand, was met by imports from the U.S. or by Canada-produced oil routed through the United States and then back into Canada, that is, by re-exports. U.S. imports of 600,000 bpd plus another 480,000 bpd of re-exports met more than half of Canada's oil demand, IHS Markit said.
In 2020, Canada's crude oil imports fell by 20 percent due to lower demand in the pandemic, but the United States further cemented its position as top oil supplier to Canada, supplying nearly four out of every five barrels of oil, the Canada Energy Regulator said earlier this year.
IHS Markit's report from today highlighted the interdependence between the two major oil producers in North America.
"The necessities of geography and the varying demands of markets for different types of crude underpin a highly complex and interdependent oil logistics system between Canada and the United States," said Celina Hwang, director, North American crude oil markets, IHS Markit.
"Although this study highlights Canadian dependence on the United States for both supply and transportation, the relationship is truly symbiotic with both nations relying on one another to meet domestic demand each day," Hwang added.
IHS Markit's report also found that disruptions to pipeline capacity out of Canada-such as attempts to shut down the Enbridge Line 5 pipeline that serves Detroit and surrounding areas of Michigan and Ohio, as well as Toronto and surrounding areas in Ontario and Quebec-will have significant impacts on the energy security in North America.
"Differing views on the pace of energy transition have put the energy interdependency between Canada and the United States under some strain," Kevin Birn, vice president and chief Canadian oil market analyst, IHS Markit, said.
"Any disruption of existing infrastructure could have significant implications for Canada, the broader North American system and energy security," Birn added.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More