US Refiners Face Potential Canadian Crude Shortfall
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US Refiners Face Potential Canadian Crude Shortfall
- US oil refiners are currently processing crude at some of the highest rates in eight years, with Canadian crude exports to the US making up approximately 63.4% of total US crude oil imports in 2025.
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Despite record diesel margins, Canadian oil production growth of 3-4% predicted for 2026 may not be enough to fill planned pipeline expansions, potentially impacting US supply.
US oil refiners are experiencing a period of high demand, processing crude oil at levels not seen in eight years. This increased activity is driven by robust diesel margins, which reached a record high of over $100 a barrel in mid-August 2026. The US relies heavily on Canada for its crude supply, with Canada providing 63.4% of US crude oil imports in 2025. Much of this Canadian crude originates from the oil-rich heartland of northern Alberta.
However, US refiners may face challenges in maintaining this supply. While Canadian oil production grew by 4% in 2025 to a record 5.35 million barrels per day, and is projected to grow another 3-4% in 2026, this growth might not be sufficient to meet the capacity of planned pipeline expansions. Canada has several ambitious pipeline projects underway or in development, including incremental expansions to existing systems and a proposed 1-million-barrel-per-day corridor to the Pacific coast. These projects aim to increase Canada’s export capabilities, with roughly 90% of Canadian oil currently flowing to the United States.
The concern is that the rate of oil sands production growth and capital investment in Canada is lagging behind the proposed pipeline capacity. This potential gap between pipeline capacity and crude availability could lead to a squeeze on imports for US refiners, particularly as they continue to operate at high utilization rates, which reached 96.1% for the week ending June 19, 2026. The high diesel margins are a reflection of tight refined product supply, rather than crude oil availability alone.