After the Closure of the Strait of Hormuz it is Understood the Race to Get to the Panama Canal
The Panama Canal has once again become a barometer of global trade. This time, the trigger is not a drought or the pandemic, but the geopolitical impact of the closure of the Strait of Hormuz, which has redirected maritime flows and driven up demand for transit through the interoceanic waterway. Ships that previously used routes through the Middle East, mainly carrying Liquefied Natural Gas (LNG) and Liquefied Petroleum Gas (LPG), are now opting for the Panama Canal, raising traffic to about 40 vessels per day in recent days. As of April 2026, the Panama Canal is experiencing increased traffic and congestion, with a significant contributing factor being the disruption of shipping through the Strait of Hormuz. The effective closure of the Strait of Hormuz due to Middle East tensions has forced shippers to reroute vessels and search for alternative routes to transport energy products, leading to a surge in demand for transit slots at the Panama Canal.
How the Hormuz Crisis Affects the Panama Canal
- Rerouting & New Routes: The standoff in the Middle East has restricted access to the Strait of Hormuz. Consequently, commercial vessels are rerouting, with more, particularly those carrying liquefied natural gas (LNG) and fuel, seeking passage through the Panama Canal.
- Increased Demand: The canal has seen around 300 additional ships transiting since October 2025, with daily passages rising to 38-40 in early 2026, despite a normal capacity of 36, causing congestion.
- Higher Costs: Because of the heightened demand, businesses are paying millions extra for last-minute transit slots in auctions, with some auctions surpassing $4 million for a single vessel.
- Fuel Flows Shift: Crude and fuel cargoes are moving along unusual routes, such as from the Atlantic basin to Asia, to avoid the restricted Middle Eastern waters.
Context of 2026 Traffic
- Previous Drought: The high traffic in 2026 is ironic because, just 1-2 years prior (2023–2024), the canal faced severe drought restrictions and low water levels that forced limits on transits.
- Current State: Due to an unusually wet season earlier in the year, the canal was able to accommodate 40-41 daily transits, but executives warn this rate is not sustainable long-term.
- Double Disruption: The situation is compounded by disruptions in the Red Sea and Suez Canal, making the Panama Canal one of the few alternative options, despite the high costs.
In summary, the blockage at the Strait of Hormuz has created a “chain reaction” that is placing strain on the Panama Canal as a key alternative global shipping route.
