IEA: Panama Canal and Red Sea crisis threatens availability of US LNG in Asia
In 2024, the drought at the Panama Canal is expected to worsen while the Suez Canal facing the risk of becoming unavailable due to the escalating attacks on cargo ships in the Red Sea.
According to the International Energy Agency (IEA), the transit of US LNG cargoes through the Panama Canal to Asia fell 16% in 2023 compared to the previous year as severe drought conditions forced the Panama Canal Authority (PCA) to implement multiple restrictions to conserve water.
The average waiting time at the Canal increased to around 15 days in mid-December. LNG tanker operators can secure transit slots through pre-booking or auction at hefty prices, from which many operators opted to take the Cape of Good Hope route despite double the journey time to 40 days or the Suez Canal route.
Shipping data revealed that LNG shipments through the Suez Canal constituted about 4% of the global LNG trade in 2023, with over 50% being deliveries from the US to Asia and the Middle East.
In 2024, the drought at the Panama Canal is expected to worsen while the Suez Canal facing the risk of becoming unavailable due to the escalating attacks on cargo ships in the Red Sea. The IEA added, “Altering shipping route would result in longer shipping distances and exert upward pressure on spot LNG charter rates.”