🇨🇦🛢️ Canadian oil is the cheapest barrel in the West. WTI is above $100. Western Canadian Select sold for $28 below it on Wednesday. That’s the widest gap since 2023. It comes down to four things: Midwest refineries running at 85.6%, $80m tankers to Asia, 600,000 b/d of Venezuelan crude back on the Gulf Coast, and full pipes. Someone collects the gap. The Midwest refiners take about $75m a day. $PSX gets $140m a year for every $1 of discount. The pure heavy producers pay. The hit lands in the fourth quarter, so next week’s results won’t show it. Full article: Canadian Oil Is $28 Cheaper Than American. Who Collects The Difference? Link 👇 themerchantsnews.substack.co…

Canada’s cheapest barrel just got a friend in Victoria. British Columbia elected its first Conservative government since 1928, with about 2/3 of the 93 seats. That matters for the $28 discount on Canadian heavy oil I wrote about. The barrel is cheap because it has one big buyer, the US, and one pipe to the Pacific, Trans Mountain, already 98% full. The outgoing government opposed new oil pipelines and locked in the northern tanker ban with Ottawa in July. The new premier, Lorne Doerkson, welcomed Pacific Link, the 1m b/d pipe to the Vancouver coast, and wants a working group with Alberta and Ottawa. Today federal Conservatives pushed a bill to scrap the tanker ban, CP reports. Hear me out: Victoria can’t lift that ban alone. It’s federal law. What moves is who sits across the table from Alberta. I’m watching the Pacific Link open season next spring. That’s when producers show whether they’ll pay for the pipe. Do not miss my article: themerchantsnews.substack.co…

Petrobras gave back its whole election rally overnight. $PBR fell about 22% in US premarket trading after Lula won Sunday’s run-off with about 51.8% of the vote. 3 weeks ago it jumped 11.5% in a day when Flávio Bolsonaro led the first round. Same oil fields. Same production plan. What moved is the market’s guess on who controls the cash: dividends, pump prices, and where the capex goes. Bolsonaro has not conceded, CNBC reports, so the noise isn’t over yet. After the first round I wrote that Brazil’s output growth is locked in whoever wins. The open question was how much of the cash reaches shareholders. Last night the market gave its first answer. themerchantsnews.substack.co…

Different Alloys:

The Canadian discount doubled, yet the barrel pays more. WCS trades $28 under WTI, but in Canadian dollars it still fetches about C$102. On 2 January it was about C$61, so that’s up 67% this year. The producers pay costs and dividends in Canadian dollars, so most of them are earning more, not less. The discount hits next quarter, though. Hardisty prices a month ahead, so the $28 lands in Q4 results. Some names are hurt and some collect. One integrated producer hasn’t been repriced yet. Who collects the difference: themerchantsnews.substack.co…

A tanker leak has closed beaches across three UAE emirates. Ras Al Khaimah has shut all its beaches until further notice. Umm Al Quwain has closed its coastline, and Sharjah has closed Al Hamriyah beach. Officials say the oil came from a tanker offshore, but they haven’t named the ship or said what caused the leak. Satellite images showed the slick off Umm Al Quwain on 19 October. With so many tankers crossing the Gulf in wartime, accidents like this were always going to happen. themerchantsnews.substack.co… Source: The National, UAE Ministry of Climate Change and Environment/ @MarioNawfal

This is Canada’s only oil export pipe that doesn’t end in the US. Trans Mountain carries 890,000 b/d from Edmonton to Vancouver. Since it expanded in 2024, China has become a real buyer of Canadian crude. That’s still not enough. Canada exports about 4.5m b/d, and nine barrels in ten still go to the US. So Canadian crude sells for about $70 in the Midwest, while Omani crude costs about $150 delivered to China, Bloomberg reports. The next pipe out has dates on it. Carney’s Pacific Link would carry 1m b/d to a supertanker terminal near Delta, but first oil isn’t due until the early 2030s, and only if it gets built. So the cheapest barrel in the West will have one customer for most of this decade. Who collects the difference: themerchantsnews.substack.co… image source: Bloomberg

Borr Drilling jack-up has sunk off Gabon. The Prospector 5 went down late on Saturday at the Dussafu licence, off Mayumba. It was being prepared to drill for BW Energy. 115 people were on board, and 110 are accounted for. Borr says the rig suffered a “punch-through” during preload. One of its legs broke through the seabed, and the rig lost stability. The rig hadn’t started drilling. BW Energy shut production at the nearby MaBoMo facility as a precaution, and no spill has been reported. Gabon has set up a crisis unit and ordered an investigation. The search comes first. Questions about the rig and the market can wait.

Renewables now make a third of the world’s electricity. In 2025 they supplied 34%, against about 20% in 2010, per Ember and Energy Institute data. Fossil fuels fell to 57%, from about 68% at the 2012 peak. Nuclear is down to 9%. Its output has barely changed in 20 years, but total demand kept growing. Before anyone writes off fossil fuels, look at what that 57% actually is. It’s still more than half of all the power on the planet, and the total keeps rising, now with data centers on top. So the share is falling, but the world still burns huge amounts of gas. That’s why I’m bullish on gas for AI power even as solar grows.

Canadian crude now sells at $28 under WTI. The usual gap is about $11. Most of the blowout traces back to one region on this map: PADD 2, the US Midwest. It buys about 65% of Canada’s crude exports. In September its refineries ran at 85.6%, after 103.5% in August, as they went down for maintenance. When your one customer shuts for repairs, your price falls with it. The other exits closed at the same time: $80m tankers to Asia, Venezuelan heavy crude back on the Gulf Coast at 600,000 b/d, and Enbridge rationing heavy barrels for November. Four causes, one barrel with nowhere to go. All in my latest article: themerchantsnews.substack.co…

🛢️ The biggest oil companies in the world mostly belong to governments. The IEA estimates that national oil companies produce more than half of the world’s oil and gas. Here are 20 of them. In the Middle East: Saudi aramco, ADNOC Group, QatarEnergy, KPC and NIOC. In Asia-Pacific: CNPC, Sinopec International Petroleum Service Corporation, CNOOC, ONGC, PETRONAS and PERTAMINA EP. In Europe and Central Asia: Equinor, Gazprom, Rosneft and KazMunayGas. In the Americas and Africa: Petrobras, Pemex, PDVSA, Sonatrach and NNPC. This year they’ve been at the centre of almost every big energy decision. These companies answer to a state, not to shareholders. They decide on security, diplomacy and national budgets as much as on returns.

Europe now pays about $27 more than America for the same gas. TTF is around $30 per MMBtu and Henry Hub around $3. The gap is three times its 2024–25 average of about $9. In 2020 the spread was close to zero. Gas was a single global price, and US LNG barely paid. Now every cargo that crosses the Atlantic earns the spread. That’s why Qatar is signing deals for US LNG, and why hedge funds shorting Henry Hub worry me. The spread can close in two ways. Europe’s price falls, through peace, a warm winter or Hormuz reopening. Or the US price rises, as LNG exports and data centers pull more gas out of the country. I think it’s the second one.

Fertilizer through Hormuz has dropped to zero. No fertilizer cargoes crossing the strait in September or October. Before the war, about 20% of the world’s traded nitrogen fertilizer went through it, Fertilizer Daily reports. The Gulf also supplies about half of the world’s traded sulfur. Hear me out: urea isn’t the problem. China raised its nitrogen exports about 47% and the US about 60%. By the end of August urea was back to its January price, IFPRI data shows. Sulfur is the problem. It has more than doubled, to above $1,000 a tonne, and phosphate is up 25–30%. You need sulfur to make phosphate fertilizer. Mosaic has idled two Louisiana plants, and India’s fertilizer subsidy bill could pass 3 trillion rupees, against 1.71 trillion budgeted. Oil found other ways out of the Gulf. Sulfur hasn’t. source: World Visualized

Canada closed 5 refineries and built one. The country had 21 refineries in 2000 and 17 in 2025, CAPP data shows. Capacity still edged up, to about 1.94m b/d. The ones that shut were mostly in the East: 2005: Oakville, 90,000 b/d, Petro-Canada 2010: Montreal East, 130,000 b/d, Shell 2012: Bowden, 6,700 b/d, Parkland 2013: Dartmouth, 88,000 b/d, Imperial 2021: Come by Chance, 135,000 b/d, now making renewable diesel The only new one is Sturgeon in Alberta, at 79,000 b/d. It took seven years to build, and its cost roughly doubled to about C$10bn. Here’s the part that matters this week. Canada exports about 4.5m barrels of crude a day, more than twice what it refines at home. It sells that crude to US Midwest refiners for $28 less than WTI. US refiners are earning record margins on it. Valero made about $39 on every barrel it refined last quarter. Canada supplies the barrel, and someone else earns the margin. So should Canada build more refineries? A refinery takes years to build. Today’s margins are a wartime price. What Canada lacks is a way to get its crude out. Trans Mountain is 98% full, and Enbridge’s next 150,000 b/d isn’t due until 2027. themerchantsnews.substack.co…

🇨🇦Canadian Oil Is $28 Cheaper Than American. Who Collects The Difference? At $28 a barrel, US refiners collect about $75 million a day trom Canadian crude. The Canadian barrel still pays C$102, up 67% this year. This is roughly what an illustrative refinery makes from a barrel: •Gasoline: 37% •Diesel: 37% •Refinery fuel gas: 8% •Jet fuel: 5% •Petroleum coke: 4% •Asphalt: 4% •Residual fuel oil: 3% •Lubricants and chemical feedstock: 2% Canada exports about 4.5m barrels a day and refines under 2m. Most of the rest goes to US Midwest refiners, who buy it at the discount and sell the gasoline and diesel at war prices. The Canadian producer gets paid for the crude. The refiner gets paid for what it turns into. Who collects the difference is the subject of my latest article. Link👇 themerchantsnews.substack.co…

The discounted Canadian barrel still pays C$102. On 2 January, WTI was $57 and the discount about $12. A Canadian barrel fetched $45, roughly C$61. On Wednesday, WTI was $100 and the discount $28. That's $72, roughly C$102. The discount more than doubled, yet the barrel is up 67% in Canadian dollars, the currency these companies pay their costs and dividends in. That's the highest since 2022, when it briefly touched about C$127. So the $28 headline hurts, but the cheques are still bigger. Who collects the difference, and who pays it, is all in my latest article👇 themerchantsnews.substack.co…

Who pays when a tanker gets hit? 3 letters in the contract decide it. Incoterms set the point where risk passes from seller to buyer: EXW at the seller's door. FOB, CFR and CIF once the cargo is on board at the port of loading. DAP and DDP at the destination, before unloading. DPU after unloading. Most people miss this: under CFR and CIF the seller pays the freight, but the buyer carries the risk from the moment the cargo is loaded. Read the contract before you read the price.

Hedge funds have never been this short US gas. Money managers hold 599,731 short-only contracts across seven Henry Hub benchmarks, Bloomberg reports. That’s the most since records began in 2013. They’re betting on a very mild winter from a “Super El Niño”. I think the crowd is leaning the wrong way. Henry Hub averaged under $3 in September, while TTF and JKM sit near $30. US LNG exports are running at record levels, Qatar is signing for US cargoes and data centers are adding demand all year round. Last week’s storage build also came in smaller than expected. When a trade gets this crowded, one cold week can force everyone out at once. image source:Bloomberg

🇶🇦 QatarEnergy has lined up 3 US deals in 2 days. The world’s second-largest LNG exporter is now buying American LNG. Cheniere Energy, Inc.: signed, 4m tonnes a year from 2031 to 2054 Venture Global LNG: in advanced talks for at least 3m tonnes a year Woodside Energy’s Louisiana LNG: in talks for up to 3m tonnes a year over 15–20 years If all 3 close, that’s about 10m tonnes a year. Add Qatar’s 70% of the 18m-tonne Golden Pass plant in Texas ( ExxonMobil). Why would Qatar buy gas from someone else? Because this year a single strait cut off its exports. When Hormuz shut, QatarEnergy declared force majeure and bought 33 spot cargoes of US LNG, mostly from Venture Global, to keep supplying Korea, Taiwan, India and Japan. In LNG your reputation depends on delivering. Qatar’s customers have 20-year contracts with it. If it can’t ship from Ras Laffan, it ships from Louisiana. Then there’s the price. Many of Qatar’s long-term Asian contracts are linked to crude oil. US LNG costs about 115% of Henry Hub plus a liquefaction fee of around $2.50. With Henry Hub near $3, that’s about $6 at the plant before shipping. So Qatar can buy at a Henry Hub price and sell at an oil-linked price. Qatar doesn’t set the oil price, but every extra dollar on Brent lifts what its oil-linked buyers pay. Every US cargo Qatar buys is a cargo Europe and Asia can’t. The world’s biggest LNG seller is now bidding against its own customers for American supply. That’s why JKM and TTF sit near $30. Qatar is buying a second route out and Henry Hub is starting to shape prices in Doha.