(March 10): The ongoing conflict in Iran could lead to an increase in traffic at the Panama canal from Asian energy buyers seeking alternative LNG sources, canal administrator Ricaurte Vasquez said in an interview with Bloomberg TV.
If the conflict in the Middle East persists, countries in Asia could turn to US LNG suppliers instead of Qatar, he said. US shippers would likely use the Panama canal to shorten the route to Asia to offset rising fuel costs, he said.
“The Asian markets will have to replace, in the short-run and depending on how long this conflict lasts, the sourcing of LNG coming from Qatar,” he said. “We should benefit, and we have the capacity because we have the water to transit the vessels.”
The canal reduced its capacity in 2023 and 2024 amid a severe drought, but has since recovered due to ample rainfall. The waterway has offered a full draft of 50 feet to shippers every day this fiscal year, which began in October. Vasquez said he expects the canal to maintain its maximum 50-foot draft for the remainder of the year. Panama’s rainy season typically begins in April and extends through November.
“For the remainder of this year, we don’t anticipate any hiccups on the water supply,” he said.
The canal is currently transiting about 34 ships per day and has the capacity to increase it to 38 and absorb the additional demand from LNG shippers, he said. The canal authority will open bidding next month for a US$1.6 billion LPG pipeline, he said. The pipeline is scheduled to open in 2031.
See also: Oil drops as Trump signals Iran conflict near end
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