Iran war boosts Panama Canal’s revenues by up to 15%
CFO Victor Vial says world trading routes will be permanently reshaped after the conflict
The Panama Canal’s revenues have climbed as much as 15 per cent due to global trade disruption caused by the war with Iran, and the Central American waterway expects to keep some of the extra traffic even after the conflict ends.
Traders have sought out the canal after Tehran choked off traffic at the Strait of Hormuz, a vital shipping lane for global oil supplies.
Chief financial officer Victor Vial told the FT the Panama Canal had boosted daily transits by as much as 20 per cent since the conflict began in late February.
“Our sales are up, definitely,” Vial said. “We were moving 34 daily transits before the conflict. Now we’re moving an average of 38 and we have days of 40 and 41 transits.”
Asian traders, in particular, have scrambled to source oil, fuel and dry bulk commodities, such as coal, which are often transported through the waterway from the US Gulf Coast. The activity has driven the Panama Canal’s lane prices to record highs, with one gas tanker last month paying $4mn to cross, though Vial said the vast majority have been below $1mn.
The Panama Canal has seen some of its own costs — including overtime — rise but increased volumes and auction price premiums suggest revenue growth “is going to be somewhere between 10 and 15 per cent, but we’ll see how long that lasts”, Vial said.
He added: “When you have a disruption in the marketplace like this, things come and go real quick — so we’re not counting the money and changing projections for the year just yet.”
The Panama Canal posted a net profit of $4.1bn on revenues of $5.71bn for the fiscal year from October 1 2024 to September 30, 2025. The current revenue projection for the fiscal year ending in September 2026 stands at $5.8bn, reflecting stronger demand due to the conflict and a lower-than-expected impact of US tariffs.
In the first half of this fiscal year, net earnings rose 12 per cent compared with the same period the previous year, to $2.3bn on revenue of $3bn.
The month-long ceasefire in the Middle East was tested by fresh clashes this week, in which Washington said Tehran had launched cruise missiles at American warships and commercial vessels, while US forces struck several Iranian small boats. Iran said it still had control over the key route, and the US paused a plan to guide ships through the strait.
Trump has previously also said he wants to “take back control” of the Panama Canal, blasting what he sees as undue Chinese influence. Panama’s top court earlier this year annulled a contract for Hong Kong’s CK Hutchison to operate ports at either end of the waterway, sparking lawsuits from the Hong Kong conglomerate.
Vial said the number of oil cargoes from the US heading through the Panama Canal to China, Japan and South Korea had virtually doubled to “12 to 13, sometimes even 14 daily transits” versus seven before the conflict started.
Even after the war ends, “I would expect that there will be changes permanently — maybe some folks will say ‘I want to hedge my bets . . . because it’s just too risky to depend on the Middle East’. I would expect that we will see some of that,” he said.
While it is hard to predict how much volume might shift, he added: “Crude tankers using the Panama Canal maybe won’t go back to seven — maybe it’ll go back to eight, nine or 10.”
While some ships arrive without a booking and have to wait for one of the three daily auction slots, the Panama Canal’s reservation system means there has been no repeat of the lengthy queues of vessels waiting to cross during a severe drought in 2023, he said. Auction prices have risen to an average of about $385,000 compared with $135,000 before the conflict, Vial said.
But he said “of the 400 auctions we’ve had since February 28, less than 1 per cent — meaning just a couple — have been above $3mn. About 80 per cent have been below $1mn . . . there has been only one that paid $4mn”.
Even if the war “stops tomorrow”, Vial still expected the disruption means “we’re still going to have higher demand than usual . . . because we are a viable option to move product to Asia”.
Going round the Cape of Good Hope takes more than 14 extra days, he said, meaning the waterway is “very competitive” even at higher prices.
Water levels are the biggest long-term constraint but the Panama Canal has been helped by a very wet February and can maintain current volumes for a few months, Vial said.