With TMX nearing capacity, Canada can be a steady supplier to Japan in the long term if the right decisions are made.
By Geoff Russ
Japan’s Prime Minister Sanae Takaichi gives her policy speech during the special Diet session Friday, Feb. 20, 2026, in Tokyo. (AP Photo/Eugene Hoshiko).
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Japan is weighing contingency plans to keep fuel supplies steady after fighting in the Middle East disrupted shipping through the Strait of Hormuz, a critical corridor for global oil flows and the route for most of Japan’s crude imports.
Japanese shipping companies have stopped oil and other shipments through the strait in recent days after warnings and rising risks in the Gulf. Analysts say any prolonged disruption could tighten supply and push up costs for import-dependent economies across Asia.
Japan imports more than 90 per cent of its oil through Hormuz, and relies on the Middle East for roughly 95 per cent of its crude supply.
Tokyo has sizable buffers. Japan holds about 254 days of oil reserves, combining private and government stockpiles, according to Japanese government data. But market volatility, higher insurance costs and longer shipping routes can still hit consumers and manufacturers, especially if disruptions persist.
The Trans Mountain bottleneck
The episode is also sharpening interest in supply diversification, including greater use of Canadian barrels shipped from the Pacific coast via the Trans Mountain pipeline system.
Trans Mountain, owned by the federal government, carries crude from Alberta to a marine terminal in Burnaby, B.C., and the expanded system has a total capacity of 890,000 barrels per day. The company says the line has been running near full lately, with throughput around 90 per cent or higher in recent months, and averaged 87 per cent utilization in the third quarter of 2025.
Chief executive Mark Maki has said “things are getting a little snug,” and Trans Mountain is pursuing staged expansions over several years, including the use of drag-reducing agents and later pump station and pipe additions, with a potential uplift of up to 360,000 barrels per day over five years.
Upgrading Japan’s refineries
For Japan, Canadian crude poses both an opportunity and a technical challenge. Most Japanese refineries are not configured for heavy, high-sulphur oil sands crude, and Japan’s petroleum industry association has cautioned that Canadian supply can be difficult to accommodate without additional upgrading capacity.
That constraint has helped drive early-stage discussions about Alberta supporting refinery modifications in Japan. It was reported in August 2025 that Alberta was exploring a joint venture in which it could help fund a coker unit so Japanese refiners could process heavier crude, a move Alberta has not previously pursued overseas.
The broader push to expand Canadian energy exports to Asia has gained political momentum as Trans Mountain volumes rise and geopolitical risks mount.
A new pipeline to the Pacific?
A Canada–Alberta memorandum of understanding released in November 2025 set out a framework that includes a proposed new private-sector pipeline to Asian markets, targeted at at least one million barrels per day of Alberta bitumen, alongside possible expansion of Trans Mountain by an additional 300,000 to 400,000 barrels per day for Asian destinations.
RBC Capital Markets has described the agreement as unusually specific for an MOU, with tight deadlines tied to industrial carbon policy, methane measures and a tri-lateral arrangement with the oilsands Pathways carbon capture project.
Researchers at the Asia Pacific Foundation of Canada say Trans Mountain has already shifted Canada’s export mix, giving producers access to Indo-Pacific markets and beginning to reduce dependence on the United States, which still took the vast majority of Canadian crude exports in 2024.
Energy economists say the immediate focus for Japan is keeping cargoes moving and dampening price spikes, but the longer-term lesson is about greater options.
“Asian buyers want reliability, and they want multiple routes,” said one market analyst, pointing to Canada’s ability to ship directly across the Pacific, bypassing some of the world’s most contested chokepoints.
With tankers rerouting and risk premia building in oil markets, the question for Canada is how quickly export infrastructure and commercial arrangements can translate into steady supply, while balancing domestic politics, regulatory timelines and refinery compatibility in key customer countries.
Geoff Russ is a writer for Resource Works, a non-partisan organization that champions responsible resource development in British Columbia and Canada. Reach Geoff at [email protected].
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