Canada leads the regional output with over 5 million barrels of daily production, the bulk of which consists of heavy crude. Significant volumes of this supply, alongside output from Colombia and Ecuador, now sit stagnant as buyers balk at transport costs that have surged nearly sevenfold. Shipping a cargo from the Americas to Asia now commands upwards of $40 per barrel, a stark increase from the roughly $4 seen before the current regional instability. Prices for flagship grades like Western Canadian Select and Colombia’s Vasconia have fluctuated wildly, shedding significant value before seeing minor rebounds as traders attempt to price in the extreme freight premiums.

The crisis stems from Middle Eastern producers monopolizing vessel availability to conduct ship-to-ship transfers outside the Strait of Hormuz. With shuttle tankers tied up in these operations, supertanker rates for routes to Asia have climbed to $1.4 million daily. Refiners in Europe and Asia, desperate for heavy crude to mitigate a global diesel shortage, are finding the landed cost of American barrels economically unviable. As long as tanker capacity remains constrained by regional geopolitical maneuvering, the resulting market imbalance threatens to keep diesel supplies tight and Western crude producers sidelined from their primary export markets.