SK Gas Pays Record $5.3 Million for Panama Canal Slot as El Niño Cuts September Transits
A record slot auction captures how the simultaneous Hormuz closure and drought-driven Canal transit cuts are squeezing liquid fuel shipping options across the Pacific.
South Korea's SK Gas paid $5.3 million to secure priority passage through the Panama Canal, oilprice.com reported Friday (2026-08-28), the highest slot fee ever recorded at the waterway, as El Niño-driven water shortages push canal operators to reduce daily transits to 32 vessels in September.6
Two constraints are converging. The Strait of Hormuz remains effectively closed to commercial traffic, forcing ships that once ran through the Gulf onto alternative routes. At the same time, the Canal that absorbed much of that diverted traffic is now throttled by drought, leaving shippers caught between an expensive slot auction and a much longer detour.1,2,6
The voyage arithmetic is stark. When Canal passage is unavailable, US LPG carriers bound for Japan must round Africa, stretching the Houston-to-Japan transit from 26 days to 45 days, an extra 19 days per voyage leg. Roughly half of US LPG carriers are already taking the longer route, according to oilprice.com's Friday (2026-08-28) reporting.6
That voyage extension ties up vessels for weeks longer on each rotation, shrinking effective fleet capacity without removing a single barrel from the trade. Product tankers moving gasoline and diesel across the Pacific face the same constraint: the cost does not appear in the commodity price but in freight rates and the demurrage charges that mount while ships queue for Canal slots.6
The $5.3 million record did not arrive without precedent. On Thursday, August 13 (2026-08-13), the owner of the container vessel Seaspan Benefactor paid $4 million to jump the Canal queue — itself a near-record at the time, with wait times already stretching beyond a week, according to people familiar with the matter cited by Rigzone. The move from $4 million to $5.3 million within two weeks shows the pace at which slot auctions are clearing.4,6
Panama Canal authorities are, at least commercially, benefiting. The waterway expects to exceed its $5.2 billion fiscal 2026 revenue forecast, driven by the surge in vessel diversions since the Hormuz closure, Panama Canal deputy administrator Ilya Espino de Marotta said, as reported by Rigzone in June (2026-06-27). That follows a strong fiscal 2025 year, when 13,404 transits generated $5.7 billion in revenue.3,5
But revenue does not expand when a transit cap is in place. September's reduction to 32 daily crossings means fewer slots per day, which mechanically stiffens competition among vessels and pushes auction prices higher. El Niño reduces water levels in Gatun Lake, which feeds the Canal's lock system, and recovery depends on rainfall patterns that canal operators cannot control.6
For diesel and gasoline traders, the stress is landing in physical costs rather than benchmark prices. NYMEX heating oil front-month was at $4.34 per gallon at Friday's (2026-08-28) settlement, while ICE Brent crude front-month settled at $88.29 per barrel. Crude benchmarks are not pricing in the shipping disruption. The slot auction is.6
JKM Asian LNG was at $23.17 per MMBtu at Friday's (2026-08-28) settlement, reflecting the tighter supply environment that Northeast Asian buyers navigate as US Gulf Coast cargoes take longer to arrive.6
The September transit cap of 32 crossings per day is now set. Whether auction prices hold near $5.3 million or climb further through the quarter depends on El Niño's persistence and the continued Hormuz closure, two variables that shippers have no leverage over.6