A pipeline outage has disrupted Canadian oil shipments to US refiners only days after President Joe Biden’s futile bid to coax more fuel from Saudi Arabia.
TC Energy‘s declaration of force majeure on some petroleum shipments through its Keystone pipeline spurred traders and refiners to bid up the price of a critical grade of oil, perhaps adding to already severe energy inflation.
The outage was caused by a power loss at a pump facility in South Dakota, US, when temperatures reached more than 38°C, or 20 degrees above average.
It happened to come shortly after Biden returned from a meeting with Saudi princes that ended with no assurances to rapidly increase petroleum supplies.
The failure to secure output rises saw Brent crude prices rise above $100 per barrel earlier today, climbing more than 2.6% to $103.88.
According to Link Data Services, an oil market analysis firm, the discount at which Canadian Cold Lake crude for future deliveries has decreased by more than 8% to $8 per barrel in the refining and petrochemical region that surrounds the US Gulf Coast.
Cold Lake crude is a type of heavy oil mined in northern Alberta’s oil sands region that is preferred by some Texas and Louisiana refineries capable of processing it into gasoline, diesel, and other products.
Prince Faisal bin Farhan Al Saud, Saudia Arabia’s foreign minister, said that the US-Arab summit did not discuss oil on Saturday and that OPEC+ would continue to analyse market conditions. TC Energy also stated that it does not know how long the outages will last.