Panama Canal Facing Significant Challenge Due to a Lack of Rainfall

October marked the driest month in Panama since record-keeping began in 1950. This water shortage is leading to reduced traffic through the Panama canal.

By February, it is expected that only 18 ships per day will be able to traverse the canal, which is roughly half the number from the previous year. This situation affects virtually every type of commodity and manufactured product, but it is particularly critical for the energy sector. In the previous year, nearly half of the goods, measured by weight, passing through the canal’s locks consisted of oil and gas-based products. These products include diesel, gasoline and liquefied petroleum gas (LPG), and the global energy supply chain heavily relies on the canal for their transportation.

This issue becomes even more relevant as the U.S. is exporting propane, a type of LPG commonly used in barbecues and outdoor heaters, at record levels. In October, propane shipments reached a record of 2.1 million barrels per day, up significantly from an average of approximately 1.3 million barrels per day in 2022, according to data from the U.S. Energy Information Administration.

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