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Canadian heavy crude is fetching near-record premiums across the Pacific, bolstering the case for the country’s plan to build a new pipeline to its west coast.

A barrel of Canadian Cold Lake crude delivered to South Korea traded at a record $9.50 a barrel more than the Dubai crude benchmark in September, according to Platts, a unit of S&P Global Energy. This month, the premium has averaged $4.33 a barrel, as compared to a discount before start of the Iran war. In China, Canadian cargoes recently had premiums of up to $14 a barrel to ICE Dated Brent futures, according to trading managers and feedstock sources at Shandong-based refiners, S&P Global said.

It’s a stark contrast to the weakening price Canadian oil is getting in the US, its biggest market. Oil sands benchmark Western Canadian Select’s discount, called a differential, to a monthly average of West Texas Intermediate futures widened to as much as $28.25 a barrel in Alberta last week, the biggest in almost four years, according to General Index.

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Because Canada’s oil producers are reliant on the US for about 90% of their exports, with the only pipeline route to the BC coast and Asian markets already operating at capacity, they are constrained in their ability to take advantage of the better pricing in Asia. Canadian Prime Minister Mark Carney’s government is moving to change that, backing a new pipeline to double exports off the west coast as part of a vision to make the country an energy superpower and to diversify trade away from the US.

Carney has pledged to fast-track approvals and for the government-owned Trans Mountain Corp. to build the conduit. His government has cited the better Brent crude benchmark price that producers could get shipping off the Pacific as a reason to move forward with the pipe.

The large US price difference is the result of a confluence of factors. Refinery maintenance, combined with imports of Venezuelan crude — similar to the oil produced in the Canadian oil sands — has created a glut of dense, high-sulfur on the US Gulf Coast, Jim Mitchel, director of oil trading analytics at Wood Mackenzie, said by phone. Soaring tanker rates have also made shipping the oil elsewhere uneconomic.

With most Canadian exports going south, the oversupply of heavy crude has put downward pressure on the price in Alberta.

The current dynamic makes Trans Mountain’s pipeline a more valuable asset, Susan Bell, senior vice president, downstream at Rystad Energy, said by phone. It also makes the new pipeline a far more compelling proposition, she said.

“If we had more capacity going off the west coast and we could get more barrels off the west coast, then the impact of Venezuela on our light-heavy differential would be much less,” Bell said. “Our light-heavy differential could be $6 or $7 stronger than what it is right now.”

By contrast, Asian buyers are struggling to get enough of the lower cost viscous oil for their refineries. Venezuelan shipments have dropped to a trickle as supplies stay in the Americas, while the Iran war has interrupted shipments out of the Middle East and reduced heavy oil from once dominant supplier Iraq, Vortexa data show.

Oil shipped from the Canadian Pacific goes on smaller Aframax tankers that are more available than the very large crude carriers that service the US Gulf. A journey to China takes about a third of the time.

Trans Mountain’s expanded pipeline has opened up Asian refiners, especially those in China, to significant exports of crude shipped by western Canadian oil sands producers. Its capacity is around 900,000 barrels a day, with plans to expand to 1.2 million in the coming years. South Korea is set to import a record volume of Canadian crude this year of around 16 million barrels, more than triple last year’s total, according to S&P Global.

The company, which is owned by the Canadian government, has been commissioned to spearhead work on the new million-barrel-a-day pipeline that would roughly follow the existing conduit route but would terminate at a new deep-water port south of Vancouver that can accommodate the largest crude tankers.