Why Canadian Heavy Crude Is Lagging a $100 Oil Market

Brent is trading above $100 a barrel, near $106 this morning, with WTI in the mid-$90s. Yet Western Canadian Select (WCS) settled about $25 below WTI last week, and that discount has widened by roughly $8 since early September. Click here to listen to the full interview.

The Discount Is Widening While Global Prices Rally

Higher global crude should be lifting Canadian producers, and some of it is. WCS, the main benchmark for Canadian heavy crude, has moved the other way, widening by roughly $8 since early September even as Brent and WTI climbed on the U.S.-Iran war. The stakes for Alberta are large: every $1 change in WCS moves Alberta royalty revenue by about C$700 million.

WCS is what Alberta producers actually receive, which makes the discount a provincial revenue story as well as a market story. Canada produced about 4.3 million barrels per day in 2025. Roughly 3.8 million barrels per day went to the U.S., mostly to the Midwest, with about half a million barrels per day reaching the Gulf Coast.

Freight Costs Are Trapping Barrels on the Gulf Coast

Refinery outages are the first driver. When refiners run less, demand for Canadian heavy barrels falls and the discount widens. The bigger issue is freight. Very large crude carriers that moved crude to Asia for less than $10 a barrel before the war now cost $30-$40, as conflict-related disruptions and longer voyages around the Cape of Good Hope have tightened global tanker availability. Our earlier work on the Strait of Hormuz standoff and Canadian energy laid out this supply-risk backdrop.

The result is excess supply in the Gulf Coast. Canadian crude that would normally be re-exported to Asia is staying in the region because shipping is too expensive. The export question hinges on Alberta’s West Coast pipeline options and the China wild card, which will shape where Canadian barrels can find buyers.

Refinery Outages Are Tightening Product Markets

Gasoline and diesel prices have been volatile, and refinery disruptions are at the center of it. Product outages push prices higher, tempering demand until supply rebalances. We are bullish on gasoline and diesel while the war continues. Our diesel analysis sets out the mechanism: refining constraints, not crude supply alone, are driving prices at the pump.

The same refinery constraints that weaken demand for Canadian heavy crude are tightening product markets, so the two dynamics are linked. Refinery restarts should help narrow the WCS discount. Shipping costs, however, will not normalize until the conflict ends or new tonnage is built, which could take years.

Our Price Scenarios and What To Watch

Our base case calls for Brent to average $100 through 2026 and 2027. Forward Brent has moved to about $93-$94, so the market is still below our call. The range of outcomes is wide: the lowest call for Brent next year sits in the high $60s to low $70s, while the highest reaches $120.

Our team watches inventory levels in U.S. and Western markets, because those stocks anchor the benchmark prices. Strait flow volumes matter less if they do not change those stocks. Physical markets can run well ahead of screen prices, as our analysis of why screen prices lag the real crisis in physical markets shows.

Top Three Takeaways:

1: Why is Canadian heavy crude trading at a wider discount when global oil prices are rising?

Refinery outages are reducing demand for Canadian heavy barrels and freight costs have surged. Shipping to Asia now costs $30-$40 per barrel, up from about $3, keeping Canadian crude on the Gulf Coast and creating a glut.

2: What is preventing the discount from closing quickly?

Shipping capacity is constrained while the Strait of Hormuz remains closed and vessels sail longer routes around the Cape of Good Hope, reducing effective tanker capacity by about 30%. We believe freight rates will not normalize until the war ends or new ships are built, a process that could take years.

3: What should readers watch next?

Watch inventory levels in U.S. and Western markets, which anchor benchmark prices, rather than the volume moving through the strait. Our base case is Brent averaging $100 through 2026 and 2027.

About Enverus Intelligence® | Research, Inc. (EIR)

Enverus Intelligence® | Research, Inc. (EIR) is a subsidiary of Enverus that publishes energy-sector research focused on the oil, natural gas, power and renewable industries. EIR publishes reports including asset and company valuations, resource assessments, technical evaluations, and macro-economic forecasts and helps make intelligent connections for energy industry participants, service companies, and capital providers worldwide. See additional disclosures here.

Jupiter in Retrograde | Oracle Hedges on Bloom’s Biggest Order

Last week, Oracle issued a force majeure notice to STACK Infrastructure, the Blue Owl Capital-owned developer of Project Jupiter, the Stargate data center campus in Doña Ana County, New Mexico. The notice preserves Oracle’s ability to seek delayed payments if the campus misses its targeted 2028 opening, although it is unclear whether the company could be released from its agreed obligations. Oracle says Project Jupiter “remains on our planned schedule” and that such notices do not by themselves indicate a delay. Still, Enverus Intelligence® Research (EIR) views the notice as a clear sign that Oracle sees material schedule risk.

That risk is not new. The project still lacks an air permit for its fuel-cell microgrid, and New Mexico twice blocked Energy Transfer’s Green Chile gas pipeline from crossing state trust land, pushing its targeted in-service date from August to February 2027. The New Mexico Supreme Court temporarily paused the air- and water-permitting proceedings before lifting the stays on Sept. 17. Lenders have also taken note, with the project’s $18 billion in loans quoted at 89 to 91 cents on the dollar.

Oracle’s contract with Bloom Energy (BE) covers about 2.4 GW of fuel cells for the site and, including a $1.2 billion expansion option, represents nearly half of BE’s estimated product backlog. EIR still expects Project Jupiter to be built. Oracle is not walking away; the project partners say their financial commitments remain unchanged, and the compute demand underpinning Stargate is real.

But the notice is Oracle’s own acknowledgment that the 2028 target faces risk, and every month of delay could push BE’s deliveries and revenue further out. In July, we called the pipeline denial Bloom’s first crack. This is the second, and with so much of its estimated backlog tied to one site, BE has little room for error.

Research Highlights:

• Network Upgrade Costs and Solar PV – LCOE Zonal Exposure and Sensitivity – Enverus Intelligence® Research identifies the independent system operator zones with the lowest solar PV network upgrade costs (NUCs). It also examines how NUC outcomes affect the levelized cost of energy and compares solar economics without the investment tax credit with recent power purchase agreement benchmarks.
• 3Q26 Long-Term Capacity Expansion – The Reliability-Led Power Buildout – Enverus Intelligence® Research projects a storage-led buildout of the Lower 48 power supply through 2050, with 1,080 GW of new capacity lifting installed capacity from 1,435 GW to 2,284 GW. Battery storage, solar and natural gas lead additions, but the path diverges sharply by region as some markets scale renewables while others lean on gas and nuclear. Falling geothermal and nuclear costs and rising gas capex reshape where each technology wins.
• ERCOT Batch Zero – Who Gets Energized, Who Waits? – ERCOT’s Batch Zero classification gives large-load developers a sense of their path to energization, but certainty remains limited. We find that only 8.8 GW of the 191.8 GW classified is associated with published near-term Quarterly Stability Assessment deadlines, while the largest and least visible projects face additional study and transmission uncertainty.

Top Three Takeaways:

1: What does Oracle’s force majeure notice mean for Project Jupiter?

Oracle’s force majeure notice is a legal safeguard that allows the company to delay payments if Project Jupiter misses its 2028 opening target. While Oracle maintains the project is on schedule, EIR views the notice as a clear signal the company sees material schedule risk ahead. The notice does not necessarily indicate an imminent delay, but it reflects Oracle’s concern about permitting and infrastructure challenges that could push the timeline.

2: How dependent is Bloom Energy on Project Jupiter?

Bloom Energy’s 2.4 GW fuel cell contract for Project Jupiter represents nearly half of the company’s estimated product backlog, making it a critical revenue stream. The contract includes a $1.2 billion expansion option, further cementing the site’s importance to the company’s future deliveries and financial performance. With so much of its backlog concentrated at a single location, Bloom Energy has limited flexibility if schedule delays push fuel cell deliveries
further out.

3: What are the primary schedule risks facing Project Jupiter?

The project faces multiple permitting and infrastructure hurdles: it still lacks an air permit for its fuel-cell microgrid, and New Mexico’s twice-blocked Energy Transfer pipeline has pushed its in-service target from August to February 2027. Lender concerns are mounting, with project loans quoted at 89 to 91 cents on the dollar, signaling diminished confidence in timely completion. Every month of delay ripples through Oracle’s procurement and Bloom Energy’s delivery timeline.