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Crude Oil Tanker MT Aegean Unity Transiting New Panama Canal Locks

The MT Aegean Unity becomes the first crude oil tanker to transit the expanded Panama Canal, August 18, 2016. Photo: Panama Canal Authority

Panama Canal Drought Risks Driving Away Large Oil Tankers

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November 6, 2023

(Bloomberg) —

Dry weather is set to force large oil tankers to completely stop using the Panama Canal, requiring the vessels to extend their voyages by thousands of miles, a shipping researcher said.

The Panama Canal Authority last week announced increasingly drastic cuts to how many ships it will allow through each day. It did so because Gatun Lake, which sits atop the waterway and feeds the locks below, has historically low water levels. By February, daily transit slots could drop to about half the waterway’s normal capacity.

That will make life especially difficult for what are known as tramp ships — that is, vessels that don’t tend to have fixed schedules but instead rely on when cargoes load — Poten & Partners Inc. said in a note on Friday. The Panama Canal is a shortcut between the Atlantic and Pacific oceans and avoiding it means sailing around Africa or the bottom of the Americas instead.

Panama Canal Traffic Is Being Throttled by Climate Change

“Large oil tankers will not feature in this trade anymore,” Poten said. 

The fact that container ships have more scheduled loading dates will allow them to snap up the canal’s booking slots before tankers can do so, according to the researcher. 

They are also unlikely to get transits via auctions that the canal holds for some slots, it added, citing a recent $2.85 million fee recently paid by a very large carrier of liquefied petroleum gas.

This October was the driest on record in Panama since record-keeping began in 1950.

© 2023 Bloomberg L.P.

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