The discount on Canadian heavy crude oil has widened to $28 per barrel below the United States benchmark West Texas Intermediate (WTI), as rising production in Alberta and increased Venezuelan supplies intensify competition in the North American market.

The price difference for Western Canadian Select (WCS) crude reached the level on Wednesday, about $15 higher than a year earlier, according to a report by The Globe and Mail.

The widening gap means Canadian oil producers are receiving less for their crude relative to the WTI benchmark, which was trading close to $98 per barrel. The development also highlights Canada’s continued dependence on the US market, which accounts for about 90 per cent of its oil exports.

Venezuelan crude supplies to the United States have increased sharply, adding pressure on Canadian producers already facing limited pipeline capacity. According to Rystad Energy, Venezuela’s oil exports to the US rose from 125,000 barrels per day at the beginning of the year to an average of 600,000 barrels per day in October.

The increase has occurred faster than market analysts anticipated, raising concerns about competition for refinery demand, according to TD Cowen analyst Menno Hulshof.

Canadian oil exports have also been constrained by the Trans Mountain pipeline system, which transports crude to the country’s West Coast and is operating at full capacity.

The combination of growing supply and limited transportation infrastructure has renewed calls for additional pipeline capacity to enable Canadian producers to reach Asian markets directly.

Analysts have pointed to the proposed Pacific Link pipeline as a potential solution. The Canadian government designated the project as a matter of national interest earlier this month, strengthening its prospects for further development.

The price difference between WCS and WTI has historically widened when pipeline capacity is insufficient or refineries in the US Midwest experience operational disruptions. The differential approached $43 per barrel in October 2018 before narrowing after the Trans Mountain expansion began operations in 2024.

Following the expansion, the discount averaged approximately $13 per barrel but has since increased as additional Venezuelan crude enters the US market.

Hulshof and his colleagues at TD Cowen have revised their forecasts for the differential, projecting an average discount of $15.50 per barrel in 2026, $17 in 2027 and $16 in 2028.

Despite the widening discount, analysts say Canadian producers continue to benefit from elevated benchmark oil prices and strong refining margins, which have helped offset some of the impact on revenues.

Rystad Energy analyst Susan Bell said Canadian producers were still generating substantial earnings from crude sales, even though the price difference had become less favourable.

Meanwhile, Scotiabank Equity Research analyst Robert Hope expects the Canadian oil and gas sector to deliver quarterly results slightly above market expectations.

Hope also pointed to growing liquefied natural gas (LNG) exports, rising electricity demand from data centres, electrification and increased Canadian oil production as factors supporting further investment in the sector.

However, geopolitical conflicts in the Middle East, risks to shipping through the Strait of Hormuz and attacks on Russian refineries continue to disrupt global energy markets and influence oil prices.

The widening crude discount has therefore strengthened the argument for Canada to expand its export routes, reduce dependence on the US market and improve access to international buyers.