Hormuz in Crisis, Panama Picks Up the Slack

As Iranian tensions choke the world’s most critical energy chokepoint, the Panama Canal is surging — but it too is nearing its limits

The global energy shipping map is being redrawn in real time. Ongoing military and diplomatic tensions surrounding the Strait of Hormuz — through which roughly 20% of the world’s oil and LNG passes — have disrupted the movement of hundreds of vessels in the Gulf, triggering a cascade of consequences that are reshaping freight patterns across the planet.

According to BIMCO, the Baltic and International Maritime Council, average daily ship transits through the Panama Canal have climbed 8% year-on-year in 2026, reaching 38 vessels per day — with tanker traffic leading the surge. In the past five weeks alone, daily transits have jumped 16% year-on-year, as US crude and LNG exports to Asian and Pacific markets surged to fill the void left by disrupted Middle Eastern supplies.

The arithmetic is stark. With the Strait of Hormuz effectively off-limits or heavily delayed for many operators, buyers of energy in Asia — including India, Japan, South Korea, and China — are scrambling for alternative sources, and American suppliers are among the biggest beneficiaries. That shift in trade flows means more laden tankers routing from the US Gulf Coast through the Panama Canal toward Pacific destinations.

For India, the implications are significant. The country depends on Middle Eastern crude for over 60% of its oil imports, and any prolonged disruption at Hormuz forces refineries to look elsewhere — including to the Americas and Africa. Indian refiners are already reported to be engaging in spot procurement from non-Gulf sources, and the higher freight costs and longer voyage times are beginning to be felt at pump prices.

The Panama Canal, meanwhile, is being pushed close to its operational ceiling. With a daily maximum capacity of 36 to 40 transits, the recent surge to 38 vessels per day leaves little headroom. BIMCO data shows average waiting times at the canal have risen 50% year-on-year to 47 hours. Competition for last-minute auctioned transit slots has intensified, with prices spiking sharply. Some operators, particularly tanker and bulk carriers unable to book well in advance, are diverting via the Cape of Good Hope or Cape Horn — adding thousands of nautical miles and days to voyages.

The pressure on the Panama Canal could worsen further. The Canal Authority has scheduled maintenance work on the east lane of the Panamax locks from June 9 to 17, temporarily cutting available transit capacity by ten slots per day. Compounding this, meteorologists warn that an El Niño weather pattern arriving between May and July could reduce rainfall in Panama, threatening the freshwater levels of Gatun Lake — the canal’s critical reservoir. In the last major El Niño cycle in 2023-24, water restrictions forced the Authority to slash daily movements to just 22 transits.

Meanwhile, BIMCO and a coalition of global shipping bodies — including the International Chamber of Shipping, INTERCARGO, INTERTANKO, and the Oil Companies International Marine Forum — have jointly issued fresh guidance for safe vessel transit through the Strait of Hormuz. The advisory warns that hundreds of vessels remain unable to transit the Strait, creating the risk of severe congestion and dangerous navigational conditions once movements resume. The guidance is designed to help shipowners and operators plan transits into, within, and out of the Gulf amid heightened security risks.

For India, which relies on Hormuz for both energy imports and a significant portion of its export-import traffic, these developments are a reminder of just how exposed global supply chains remain to geopolitical fault lines — and how rapidly disruption in one chokepoint can ripple across the entire maritime trade ecosystem.