November 21, 2023 – Energy Intelligence Oil Daily
Panama Canal Disruptions Appear Likely to Intensify
Drought conditions at the Panama Canal are roiling flows of gas liquids, tightening tanker availability and could eat into robust US exports, market players and experts say.
And the situation will likely get worse before it gets better.
The Panama Canal Authority (PCA) has repeatedly slashed the number of vessels that can traverse the canal, with only 24 ships allowed as of Nov. 12. That figure will drop to 22 in December and just 18 in February. The cuts are a function of drought, which has lowered the water levels at Gatun Lake that are used to operate the canal’s locks.
“In other words, the waterway … is already operating at only 60% of its typical capacity and — barring a major turnaround in the weather — it will be operating at only 45% of capacity by early next year,” said Housley Carr of RBN Energy.
With traffic at the canal backing up and ships paying premiums to traverse on time, some vessels are already starting to take different, longer routes. That not only tightens tanker availability, bolstering freight rates and increasing shipping costs, it also means shipments take longer to arrive at their destinations.
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