Disruptions at the Strait of Hormuz are spilling into global shipping thousands of miles away, pushing oil and LNG cargoes onto longer routes through the Panama and Suez Canals. Panama Canal transit auctions have hit a record $5.3 million per slot, and tanker charter rates have topped $1 million a day as the crisis drags into its seventh month.
Panama Canal fees hit record highs
South Korea's SK Gas paid $5.3 million to secure a Panama Canal passage on September 1, a record that topped the previous high of $4.6 million set by another South Korean shipper earlier in August. Daily auction bids for Panama slots averaged above $1 million in August, up 16 times from a year earlier.
The median auction price stood at around $55,000 before the war in Iran broke out in February. Waiting times for vessels without booked slots have since stretched to 17 days, compared with two days in February.
Reduced rainfall adds to the squeeze
The Panama Canal Authority has also capped daily transits, cutting traffic to 34 vessels from September 4 and then to 32 ships from September 15 because of reduced rainfall tied to the Super El Niño pattern. Average auction prices rose to about $385,000 in March and April after the Hormuz conflict began, up from $135,000-$140,000 beforehand, Panama Canal Vice President of Finance Víctor Vial said in April.
Tanker rates top $1 million a day
The wider tanker market is under similar strain. Charter rates for crude tankers have recently topped $1 million a day for the first time, as owners weigh the risk of passage through the Strait of Hormuz against a tightening supply of available vessels. Shipbroker Fearnleys said "access to physical crude trumps freights at the moment" as refineries scramble for crude oil supply.
Suez Canal traffic is reporting a similar surge in revenues and oil tanker transits, as vessel operators avoid the southern Red Sea and the Bab el-Mandeb Strait. Both canals are absorbing traffic that would otherwise have moved through Hormuz, leaving shipping costs elevated across every major route.
Source: Oilprice.com
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