Prices for Panama Canal transit slots have hit a record high, with daily auctions averaging about $1.1mn in August, more than sixteen times last year's average. The surge is driven by an intensifying El Niño and the closure of the Strait of Hormuz following the US and Israel-led bombardment of Iran. Lower water levels in Gatun Lake are expected to limit cargo capacity and reduce passage slots.

The average price for the larger locks reached $2.5mn, the highest recorded. The Panama Canal Authority imposed draft restrictions, reducing the water level to 47.5 feet by September 3, down from 50 feet. This forces ships to carry less cargo, raising costs and causing queues. Water levels are projected to fall further ahead of the dry season, potentially worsening conditions compared to 2023.

Some vessels have paid over $1mn at auction, reflecting temporary market fluctuations, the Authority said. However, further restrictions may be imposed if conditions deteriorate. Asian buyers have increased purchases of crude from the US Gulf Coast due to the Strait of Hormuz closure, boosting demand for Panama Canal transit.