Panama Canal shipping: water, draft limits and the 2026 Hormuz surge

Panama Canal shipping reached some of its highest levels on record in 2026. The canal averaged 35 transits a day in the first nine months of its fiscal year, with 10,726 ships between October 2025 and June 2026, 5.2% more than a year earlier, according to the Panama Canal Authority. At the peak of the Hormuz closure it handled 40 to 41 ships a day, above its usual 34 to 35, as US exporters sent LPG, LNG and refined products to Asian buyers who had lost Gulf supply. The EIA puts oil through the canal at about 2.3 million barrels a day in fiscal 2025.

What sets Panama apart from every other chokepoint in this encyclopedia is that its capacity is a function of rain. The locks are filled by Gatun Lake, a freshwater reservoir that also supplies drinking water to much of Panama, and every transit spends water. In the 2023 and 2024 drought the authority cut daily transits to about 22 and imposed draft limits. A strong El Niño forecast for late 2026 has brought that risk back: in July the authority said it was preparing precautionary measures for the first time after almost two years without draft restrictions.

Key numbers

What flows through the Panama Canal

Containers are the largest segment by revenue, mostly between Asia and the US East Coast. Energy is the segment that moves with geopolitics. US Gulf Coast exporters use the canal for LPG, LNG and refined products bound for Japan, South Korea, China and the west coast of Latin America, and grain from the US Gulf and East Coast crosses it on the way to Asia. The EIA series shows oil through the canal at 2.2 mb/d in 2022 and 2023, dipping to 2.0 mb/d in 2024 during the drought and recovering to 2.3 mb/d in fiscal 2025.

The 2026 surge came from the tanker sector. BIMCO counted an 8% rise in transits in the first months of the year to an average of 38 a day, driven by tankers, as the Hormuz closure pushed Asian buyers toward US cargoes. See US LNG exports. The authority reported record demand for its auction slots, where ships bid for priority passage.

Who depends on the Panama Canal

The United States first: most canal cargo starts or ends at a US port, and the canal is the shortest route from the US Gulf Coast to Asia. Northeast Asian importers depend on it for part of their US energy supply, and west coast Latin American economies, from Chile to Ecuador, depend on it for trade with the US East Coast and Europe. Panama itself depends on the canal for a large share of state revenue.

Alternatives and bypass routes

Cape of Good Hope. US Gulf LNG to Asia can go east around Africa, adding about two weeks. During the drought many cargoes did. See Cape of Good Hope.

Suez Canal. A second eastern route for US Gulf cargo to Asia, but exposed to the Red Sea risk that has kept most traffic away since 2023.

Cape Horn and the Strait of Magellan. Open ocean, long and weather-exposed; used when both canals are costly.

Overland. US rail from the Gulf to Pacific ports, and Mexico's Tehuantepec interoceanic corridor, move a fraction of canal volumes.

New water. The structural fix is the Río Indio reservoir, approved by the canal board in February 2025 at a cost of $1.6 billion, with tendering in 2026 and 2027 and completion targeted around 2032.

Historical incidents

Assets and companies exposed

Panama Canal Authority and the Panamanian treasury, which depend on tolls and auction revenue.

US energy exporters. LPG, LNG and refined product exporters on the Gulf Coast, including Enterprise Products, Energy Transfer, Cheniere and Venture Global, whose Asian deliveries use the canal.

Shipping lines and owners. Container lines on Asia to US East Coast services, LPG carrier owners and LNG shipping companies that pay the tolls and auction premiums.

Northeast Asian buyers. Japanese, Korean and Chinese utilities and petrochemical companies buying US LPG and LNG. This entry is descriptive: the encyclopedia does not publish recommendations.

What to watch

• Gatun Lake levels and the authority's draft and transit advisories, especially from the start of the dry season in December.
• NOAA El Niño forecasts for Central America.
• Auction prices for priority slots, the clearest sign of congestion.
• Hormuz reopening: a return of Gulf supply to Asia would ease demand for canal slots.
• Río Indio tender and construction milestones.

FAQ

How many ships pass through the Panama Canal? About 35 a day in fiscal 2026, with 10,726 transits between October 2025 and June 2026, according to the Panama Canal Authority. Traffic peaked at 40 to 41 a day during the Hormuz closure.

How much oil goes through the Panama Canal? About 2.3 million barrels a day in fiscal 2025, according to the EIA, much of it US refined products and LPG bound for Asia and Latin America. It is a smaller oil chokepoint than Malacca or Hormuz, but a major one for LPG and US LNG.

Why does drought affect the Panama Canal? Because each ship that transits uses freshwater from Gatun Lake to fill the locks. When rain falls short, the authority limits transits and draft to protect the lake, which also supplies drinking water to much of Panama. In the 2023 and 2024 drought daily transits fell to about 22.

Did the Hormuz closure affect the Panama Canal? Yes, by raising demand. Asian buyers who lost Gulf supply turned to US LPG, LNG and fuels, and traffic rose to 40 to 41 ships a day at the peak. The authority expects fiscal 2026 revenue to exceed its $5.2 billion forecast.