As negotiations between the United States and Iran remain stalled, international oil prices are rising, and shipping costs are increasing. Iran has raised the conditions for reopening the Strait of Hormuz, while the U.S. has intensified its maritime blockade against Iran, raising concerns about prolonged disruptions in energy supplies from the Middle East.
The blockade of the Strait of Hormuz has led to increased demand for U.S. crude oil and petroleum products from Asian countries, resulting in a surge of vessels heading to the Panama Canal. Compounding the situation, lower water levels due to El Niño have driven transit fees for the canal to record highs.
Stalled Negotiations Push Brent Crude Near $90
On August 11, Brent crude futures in the Asian market reached $89.63 per barrel, while West Texas Intermediate (WTI) climbed to $83.91. Compared to August 4, when hopes for a U.S.-Iran agreement were high, Brent has risen approximately 13%, and WTI has increased about 11%.
The weakening expectations for an early reopening of the Strait of Hormuz have contributed to this rise. Mohsen Rezaei, Secretary of Iran's Supreme National Security Council, stated on August 11, "We will not open the Strait of Hormuz unless the U.S. ends the war and releases frozen funds abroad."
U.S. President Donald Trump has also escalated pressure, mentioning in an interview with 'Real America Voice' on August 11 that he would continue economic pressure to let Iran fail or consider a strong military response.
The stalemate in negotiations is leading to actual disruptions in oil transport. Only six vessels passed through the Strait of Hormuz on August 10, significantly lower than the recent average of about 11 vessels per day and far below the pre-war average of 125 to 140 vessels.
According to the U.S. Energy Information Administration (EIA), oil and petroleum transport through the Strait of Hormuz plummeted from an average of 21.6 million barrels per day in the fourth quarter of last year to just 4.9 million barrels per day in the second quarter of this year. Last month, disruptions in oil production in the Middle East were estimated at an average of 5.5 million barrels per day. The EIA predicts that transit through the Strait of Hormuz will remain significantly restricted through this month.
The U.S. is also intensifying enforcement of its maritime blockade. On August 11, U.S. Central Command reported that the cargo ship Belanova, bound for an Iranian port, was disabled by two Hellfire missiles after ignoring repeated warnings.
Increased U.S. Oil Demand in Asia Creates Bottlenecks at Panama Canal
The effects of the Strait of Hormuz blockade are extending to the Panama Canal. According to the Financial Times, the average price for same-day transit rights at the Panama Canal has surged to about $1.1 million this month, more than 16 times higher than the same period last year, reaching an all-time high. Some transit rights for large vessels have fetched as much as $3.78 million in certain auctions.
This increase is not due to a rise in the basic tolls for the canal, but rather intense competition for securing same-day transit rights has driven auction prices up. Up to 30% of the vessels using the canal participate in same-day auctions.
The blockade of the Strait of Hormuz is a key factor behind this situation. Asian refiners and energy companies are increasing purchases of U.S. Gulf Coast crude oil and petroleum products instead of Middle Eastern oil, leading to a surge of vessels heading to the Panama Canal, a crucial route for shipments from the U.S. to Asia.
Additionally, drought conditions exacerbated by El Niño are worsening the bottleneck. The water level of Gatun Lake, which supplies water necessary for canal operations, has dropped, raising concerns about reduced vessel capacity. As of August 3, the number of vessels waiting to transit was 113, nearly triple the 40 vessels waiting on January 2.
Panama Canal authorities stated, "Current water level restrictions will not reduce the number of vessels transiting per day." However, they have not ruled out the possibility of additional restrictions if water levels drop further. Shipping information firm Argus noted, "The rate of decline in Gatun Lake's water level is unusually rapid," and warned that the situation could worsen compared to the severe drought experienced in 2023.
* This article has been translated by AI.
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