President Donald Trump’s bungled war in Iran has sent prices in the Panama Canal soaring.
The fuel squeeze caused by “Operation Epic Fury,” now in its eighth week, means that the price for companies to use the busiest shipping lanes in the strait in Panama now averages $837,500, according to data compiled by Argus Media.
The Asian market has been most affected by issues with the other vital waterway, the Strait of Hormuz, which Iranian officials confirmed on Wednesday remains closed.
This has caused freight to divert to the Panama Canal, where most ships pass through the Panamax locks, and prices have increased because of the war. “About 70 percent of vessels that transit the Panama Canal use the original Panamax locks, which have seen auction prices jump almost 10-fold since the Iran war began and closure of the Strait of Hormuz,” Ross Griffith, head of Americas freight pricing at Argus, said.
“This is a very significant increase that reflects how Asian buyers are scrambling to source oil, fuel, and dry bulk commodities, such as coal, mainly from the U.S. Gulf Coast.”
The increased traffic also means that wait times at the canal are up to 4.25 days, a six-week high, according to data research group Kpler. Companies are now paying millions to skip the queues.
Big energy and freight companies typically reserve slots at a set rate, while others bid in an open auction for passage. Kenneth Medlock, senior director of the Center for Energy Studies at Rice University in Houston, said the gaps in the Asian market are causing the price spikes.
“While the majority of U.S. vessels have gone to Asia through the Cape of Good Hope, it is much more profitable to go through the Panama Canal,” Qasim Afghan, an analyst at market analytics platform Spark Commodities, said.
In a post on X on Wednesday, Iran’s chief negotiator in talks with the U.S., Mohammad Bagher Ghalibaf, said that “the blatant violations of the ceasefire” by the U.S. and Israel mean that the Strait of Hormuz shall remain shuttered for now.
The White House has been approached for comment.
