The Panama Canal is making more money than at any point in its recent history, and its leadership is openly uncomfortable saying so. Revenues are up between 10 and 15% year-on-year, daily transits have hit their operational ceiling on multiple occasions, and auction prices for crossing slots have nearly tripled — all since late February, when the Strait of Hormuz, through which approximately 20% of the world's oil and LNG transited in peacetime, effectively closed to Western-associated shipping following US and Israeli strikes against Iran. The windfall is real. So is the Canal management's reluctance to build it into full-year projections.

"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," chief financial officer Victor Vial told the Financial Times. The caution is well-founded: a month-long ceasefire in the Middle East has already been tested by fresh exchanges, with Washington reporting Iranian cruise missile launches against commercial vessels and US warships, while Tehran maintained it still controlled the strait. The Canal is benefiting from a crisis it cannot control and cannot predict.

But the composition of traffic tells a more consequential story. Crude tanker daily transits have roughly doubled from seven before the conflict to between 12 and 14, Vial told the FT. LNG vessel crossings through the Neopanamax locks have surged from 24 to 44 in the seven months to April 2026, nearly doubling year-on-year, according to figures reported by La Prensa Panamá. US crude exports through the Canal have exceeded 200,000 barrels per day in early April, approaching the highest level since July 2022, according to Kpler data cited by Bloomberg. Chemical tankers, a segment less sensitive to headline geopolitical narratives, recorded growth of 15.2% to 1,464 transits, suggesting broader rerouting of speciality cargo well beyond the energy headlines.

The traffic shift has a clear driver. With no LNG tankers having exited Hormuz since the conflict began and Qatar's main LNG export facility damaged, Asian buyers have been forced to compete aggressively for US Gulf Coast supply routed through the Canal. Tankers accounted for more than one-third of Canal transits in March, overtaking container ships for the first time, according to S&P Global Market Intelligence. Daily transits have risen from a pre-conflict baseline of 34 vessels to an average of 38, with peak days reaching 41 — the operational maximum. April alone recorded a 13.7% year-on-year increase in high-draught vessel crossings, with 1,161 transits against 1,021 in the same month of fiscal 2025. The cumulative tally for the seven months to April 2026 stands at 7,444 high-draught transits, up 5.1% from 7,083 in the equivalent period of fiscal 2025.

Auction slot prices have tightened accordingly. The average price for a reserved crossing has risen from $135,000 before the conflict to roughly $385,000. One gas tanker paid $4mn in a single crossing — a record — though Vial contextualised the outlier precisely: "Of the 400 auctions we've had since February 28, less than 1% have been above $3mn. About 80% have been below $1mn." The Canal posted net profit of $4.1bn on revenues of $5.71bn in fiscal year 2025; the current projection for fiscal 2026 stands at $5.8bn, with first-half net earnings already up 12% year-on-year to $2.3bn on revenue of $3bn.

What the Canal's leadership is less guarded about is the structural argument. Going around the Cape of Good Hope adds more than 14 days of sailing time, Vial noted, making the waterway "very competitive" even at elevated tolls. He expects crude tanker transits to settle permanently above pre-war levels even after hostilities end, as operators reassess the risk of concentration in Middle Eastern transit lanes. The International Maritime Organisation's Secretary-General Arsenio Domínguez, speaking at the Maritime Convention of the Americas 2026, broadly endorsed that framing, describing the Canal as having become a strategic alternative absorbing cargo that can no longer move through Hormuz, and calling on Panama to use the moment to expand the Canal's port capacity and embed decarbonisation infrastructure into new development.

Independent analysts are more cautious about the durability of the windfall. Ioannis Papadimitriou, lead freight analyst at Vortexa, warned in an assessment cited by CNN that if the Hormuz disruption is prolonged, "we're going to see loss of barrels that cannot be replaced from anywhere," a scenario in which the Canal's current traffic surge would plateau or reverse as the underlying cargo volumes it depends on simply cease to exist. S&P Global Market Intelligence, in an April 28 report, flagged a more immediate risk: congestion. With the Canal already operating at full capacity, the firm warned that tanker traffic linked to LNG and refined fuels will increasingly compete with container shipping during peak season over the next two to three months, and that the Canal is likely to remain "a binding constraint" with limited spare capacity to absorb further shocks. The El Niño risk compounds that picture directly.

The Canal's binding constraint is not demand but fresh water. February rainfall was unusually heavy, providing several months of operational headroom, but the structural exposure is significant: the 2023–24 drought cut daily transits to just 18 — a historic low — and the $1.6bn Río Indio dam project approved in January 2025 will not be operational until 2032. S&P Global assessed the probability of El Niño conditions emerging between May and July as high, which could reduce rainfall in Central America and constrain Canal transit slots precisely as peak shipping season intensifies.

It is partly against that vulnerability that Panama announced discussions on a water-management cooperation agreement with Israel during President Isaac Herzog's state visit on May 6, the first by an Israeli head of state to the country, with President Mulino describing the aim as a fast-track arrangement bypassing bureaucratic delay. Israel produces roughly 80% of its domestic water through desalination and recycles 90% of its wastewater, the highest rate globally, offering technology that Panama has a structural need for.

The geopolitical setting of that agreement is not incidental. The Supreme Court ruling in January annulled the Canal ports contract held by CK Hutchison — a Hong Kong-based conglomerate — at Balboa and Cristóbal, the terminals flanking the Canal's Pacific and Atlantic entrances. The decision, which followed sustained pressure from Washington, has left a legal and operational vacuum that Maersk and MSC are filling on a transitional basis, while CK Hutchison pursues international arbitration seeking over $2bn in damages. Beijing, increasingly irritated, suspended COSCO operations at Balboa in response. Around 40% of US container traffic passes through the Canal annually, representing approximately $270bn in annual cargo.

The small Central American country sits, with limited room for equivocation, at the junction of the US-China rivalry, a Middle Eastern conflict its trade flows are now partly financing, and a domestic fiscal dependency — Canal revenues generate between 7 and 9% of GDP — that makes the waterway's operational continuity a matter of national solvency.

The revenue surge is genuine and, on the structural shipping logic, partly durable. But it rests on a crisis that could de-escalate, a water system that remains exposed, and a geopolitical alignment whose costs Panama has not yet fully been asked to pay.