Canadian crude continues to lag the major benchmarks even as global prices soar. Western Canadian Select, the benchmark for Alberta’s heavy crude, settled for November delivery at Hardisty at 26.40 dollars a barrel below WTI on Thursday, widening from 25.55 dollars on Wednesday and around 10 dollars in mid September. The discount is now more than 15 dollars a barrel wider than it was a year ago, on the same day front month WTI traded above 100 dollars for the first time in a month and Brent for December delivery jumped 3.33 percent to 109.50 dollars.
The causes are different from past blowouts. “In the past when (price) differentials would weaken, often it was because of egress constraints,” Patrick O’Rourke of ATB Capital Markets told the Financial Post. “Not this time.” Ukrainian strikes have severely damaged Russia’s refining capacity, pushing global diesel prices to record highs, and refiners are favouring lighter, sweeter grades because they yield more diesel per barrel, reducing the appeal of Alberta’s heavy barrels. Shipping is the second squeeze: the market for very large crude carriers is the most competitive of any vessel class, with about 5 percent of the roughly 1,000 vessel global fleet out of service and VLCC rates at an all time high of 805,000 dollars a day in October, about 15 times recent averages. Toronto based researcher Rory Johnston told the Financial Post that shipping crude from the Middle East to China, which normally costs about 3 dollars a barrel, now costs around 42 dollars, and the cost explosion hits Canadian oil because its final buyers are increasingly in Asia.
Third, WCS faces more competition from Venezuelan crude: as US imports of Venezuelan heavy crude rose after political and sanctions changes in early 2026, Gulf Coast refineries built to process heavy sour crude found an alternative supply, suppressing Canadian pricing power. Finally, the Trans Mountain expansion, which previously eased export bottlenecks, is essentially full: the 890,000 barrel a day pipeline hit maximum capacity for the first time in June 2026, with Canada’s crude output expected to surpass its record 5.3 million barrels a day this year. TD Cowen, which recently raised its global oil price forecasts on persistent geopolitical supply risk, nevertheless predicts the large WCS discounts will persist in 2027 on pipeline constraints and rising imports of competing heavy crudes, while staying constructive on Canadian energy equities because higher benchmarks still leave producers with strong balance sheets and cash flows.