A potential rail strike in Canada is not expected to seriously disrupt oil exports to the U.S., thanks to extra capacity on pipelines like Trans Mountain, according to people familiar with the situation.
North American companies, including fertilizer supplier Nutrien and U.S. logistics firm C.H.
Robinson, are preparing for possible simultaneous stoppages at Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC), which could cost Canada’s economy billions of dollars.
However, U.S. imports of Canadian crude oil by rail have decreased significantly in recent years, now averaging around 55,000 barrels per day, far below the 4.2 million barrels per day that the U.S. imports from Canada, mostly through pipelines.
Industry experts believe that the recent expansion of Trans Mountain and available pipeline capacity will prevent deep price cuts in Western Canadian Select crude, even if rail services are disrupted.
Jeremy Irwin, an oil markets analyst at Energy Aspects, explained that crude oil transportation by rail is less crucial for the Canadian market due to the Trans Mountain expansion, which nearly tripled crude flow from Alberta to the Pacific coast.
Additionally, maintenance at U.S. refineries that process Canadian crude could free up more pipeline space, reducing the potential impact of a rail strike.
Some refined products, like propane, which rely heavily on rail transport, could face delivery challenges if the strike lasts more than two weeks. However, companies are stockpiling supplies and making contingency plans to minimize the impact.
This summary is based on information from Reuters, with a unique perspective added for clearer understanding.