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, low 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 12, Reuters reported that Brent crude futures in the Asian market reached $89.63 per barrel, while West Texas Intermediate (WTI) climbed to $83.91. This marks an increase of approximately 13% and 11%, respectively, compared to August 4, when hopes for a U.S.-Iran agreement were high.
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 either let Iran fail on its own or to strike it hard.
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 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 soared to about $1.1 million this month, more than 16 times higher than the same period last year, reaching an all-time high. Some auction prices for large vessel transit rights have hit as high as $3.78 million.
This surge is not due to an increase in the basic tolls for the canal, but rather intense competition for same-day transit rights. Up to 30% of all 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 their purchases of U.S. Gulf Coast crude oil and petroleum products instead of Middle Eastern oil, leading to a backlog of vessels at the Panama Canal, a major 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 loads. 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 additional restrictions if water levels drop further. Shipping information firm Argus noted that the rate of decline in Gatun Lake's water level is unusually rapid, suggesting that conditions could worsen compared to the severe drought experienced in 2023.
* This article has been translated by AI.
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