FT: Iran war triggers surge in Panama Canal shipping costs

The cost of transiting the Panama Canal has reached record levels amid the military conflict with Iran, as Asian buyers of oil and gas seek alternative routes following the closure of the Strait of Hormuz.

Daily auctions for canal transit slots have attracted five times more bids than before the conflict, while the average price for Panamax-class vessels has risen to $837,500, the Financial Times reports.

Ross Griffith, head of freight pricing for the Americas at Argus Media, said about 70% of vessels transiting the Panama Canal use the original Panamax locks, with auction prices rising nearly tenfold since the start of the war with Iran and the closure of the Strait of Hormuz.

“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 US Gulf Coast,” he stressed.

Meanwhile, US President Donald Trump’s decision to unilaterally extend the truce has not opened the Strait, according to CNBC.

Iran is still trying to control ship traffic in the sea lane, while the US imposes a blockade of Tehran’s ports and vessels.

By Bakhtiyar Abbasov