What Happened
Shipments of fuel, including liquefied natural gas (LNG), are increasingly transiting the Panama Canal as a result of disruptions in the Middle East, Panama Canal Authority (ACP) administrator Ricaurte Vásquez said. A blockade in the Strait of Hormuz — through which about 20% of the world’s oil passes — and restrictions on LNG exports from some producers have pushed shipping lines to seek alternative routes through the interoceanic waterway.
Canal Capacity and Operations
Vásquez told La Prensa that the timing of the crisis has coincided with favorable water conditions for the Canal. Reservoir Alhajuela was at 249.89 feet of a 255-foot maximum, enabling the ACP to sustain a continuous flow of transits. The Canal recently has handled between 36 and 38 transits per day and in some cases reached 40, with scheduling adjustments allowing the increased traffic.
Before the crisis, the Canal managed an average of four LNG transits per month. According to Vásquez, that number has risen markedly since March and “within a few weeks, we will be seeing a daily transit of these vessels.” The ACP expects that some LNG shipments that would normally go from Qatar to Asia may be rerouted to the United States, creating more demand on Panama’s waterway.
Economic Impact
The ACP has recorded higher revenues corresponding with the traffic rise, estimating an increase of between 7% and 10% during the first five months of the year. The authority says it has the technical capacity to absorb temporary increases in transits through efficient scheduling: “Unlike what happened in 2023, at this time the Canal has the capacity to handle the increase in transits. This is a matter of efficient scheduling of transits,” Vásquez explained.
Vásquez also noted that security measures are being adjusted in response to global events: “Security is adjusted depending on circumstances, and in this case we are taking the necessary measures to guarantee the safety of operations.” He warned, however, that if the conflict in the Middle East persists the effects could become negative for Panama’s energy sector and broader economy.
What This Means
The Canal’s role as a shorter, efficient transit route is being reinforced as shipping lines reconfigure routes, a process the administrator said typically takes 21 to 30 days. Beyond immediate gains in transit volume and revenue, Vásquez highlighted wider risks: disruptions could affect fertilizer supplies and other goods moving through the Persian Gulf, raise freight costs and insurance premiums, and push up global transport prices if the situation prolongs.
For now, the ACP maintains that its infrastructure and scheduling can manage the current surge, but the longer-term implications will depend on how the international crisis evolves.