Report · Natural gas & LNG · Shipping & chokepoints
Panama Canal: El Niño Risks Raising Asia’s Energy Import Costs
LNG, LPG and Oil Price Outlook
The Iran war had already tightened two vital chokepoints. This report examines what a third constraint would do: renewed El Niño restrictions on the Panama Canal, and how they would feed through freight into Asian LNG, LPG and oil prices.
Co-authored with Benjamin Lozovsky.
Full report: 16-minute read.
- 33 slots
- Daily canal transits announced from 15 October 2026, against 36 in normal conditions
- US$5.3m
- Record auction bid for an LPG carrier transit, 1 September 2026
Summary
Renewed Panama restrictions would compound an already tight energy system. The Panama Canal Authority cut daily transit slots from 36 to 32 in September 2026, then announced 33 from 15 October and raised the permitted draught to 14.94 metres. Our base case assumed that this relief would prove temporary and that capacity would tighten again to roughly 28–30 transits a day through the fourth quarter as a strong El Niño developed.
We expected the clearest effect in freight and in delivered LNG and LPG prices in Asia, with outright Brent a secondary channel. The base case placed JKM at US$27–31 per MMBtu, BLNG3 at US$70,000–90,000 a day and BLPG3 at US$350–400 a tonne through late Q4 2026. Confidence was medium-high on freight and medium on LNG and LPG prices.
The thesis depended on the recent improvement in rainfall and operating conditions proving temporary.
- 3.2 mb/d
- Oil flows through the Panama Canal (EIA, second quarter of 2026)
From the report.
Key findings
An auction premium buys access; it does not replace the toll. Under the published tariff a 3.9 million MMBtu LNG carrier would pay a base toll of roughly US$648,500. The US$5.3 million bid in September was an exceptional scarcity premium for immediate passage.
Paying, waiting and rerouting are competing options. The EIA estimates that a US Gulf to East Asia propane shipment takes about a month through Panama and around two weeks longer via the Cape of Good Hope. The choice depends on the value of time, and the three costs should not be added together.
Freight had already repriced. BLNG3, the US Gulf to Japan LNG freight route, rose from US$29,400 a day on 4 September to US$66,000 on 25 September. By 2 October it had eased to US$59,100, still about double its early-September level.
The marginal cargo sets the Asian price. A rise of US$0.25–1.00 per MMBtu in logistics costs does not move JKM by the same amount. When inventories are being drawn and replacement cargoes are scarce, a buyer may have to pay more than the transport cost to divert the next cargo.
Oil is a secondary channel. Fully laden VLCCs do not transit the canal, so the report expected crude to be affected through freight, product prices and competition for replacement barrels: roughly US$3–6 a barrel of incremental support in the severe case, assuming an otherwise unchanged global balance.
Views and outcomes
0 assessed · 3 still open
None so far.
Baltic Exchange BLNG3 spot rate
Entry 29,400 US$/day ·
Target 70,000–90,000 US$/day ·
Baltic BLPG3 freight futures
Entry 283.33 US$/t ·
Target 350–400 US$/t ·
JKM LNG spot (Platts)
Entry 25.71 US$/MMBtu ·
Target 27–31 US$/MMBtu ·
Open
Current 31.35 US$/MMBtu · Indicative
Move +5.64 US$/MMBtu (+21.94%)
Prices auto-refresh on weekdays; dates show the observation. JKM CFD quotes are indicative. Forecasts are assessed at their due dates; averages use the full period.
Methodology and benchmark notes
Every published call and dated base-case benchmark view is included, including misses. Duplicate calls appear once. Entries are publication references, not executed trades. Moves are price changes, not forecast verdicts. Brent uses front-month futures. Related spot or indicative points are chart context; outcomes use the stated benchmark. Daily and weekly sources keep their actual observation dates.
Baltic Exchange BLNG3 spot rate: This spot assessment is a current reference point. The end-Q4 2026 view remains unresolved until its assessment date.
Baltic BLPG3 freight futures: The published call names BLPG3 freight futures. The related spot assessment is shown for context only; it does not assess the futures call or establish its end-Q4 result.
JKM LNG spot (Platts): The spot forecast is assessed at the end of Q4 2026. This quote and the move from the report reference are indicative, rather than verified Platts physical spot assessments.
What would change the view
Would weaken the view
- The announced 33 daily slots from 15 October are delivered and sustained, and permitted draught stays at 14.94 metres or improves.
- BLNG3 falls below about US$50,000 a day for two consecutive weeks, BLPG3 below about US$300 a tonne despite continuing Panama restrictions, or JKM trades below US$23 per MMBtu.
Would strengthen it
- Daily transit availability falls below about 27 vessels, especially towards the 2023–24 level of 22, or draught restrictions approach 13.4–14.0 metres.
- JKM moves above US$30 per MMBtu while Middle East supply is broadly unchanged, giving cleaner evidence that Panama constraints are reaching Asian delivered prices.
Conditions as set out in the report when it was published.
From the report
| Premium paid | LNG, US$ per MMBtu | LPG, US$ per tonne | Oil, US$ per barrel |
|---|---|---|---|
| US$250,000 | 0.06 | 5.56 | 0.50 |
| US$1,000,000 | 0.26 | 22.22 | 2.00 |
| US$4,000,000 (high case) | 1.03 | 88.89 | 8.00 |
Cargo assumptions: LNG 3.9 million MMBtu; LPG 45,000 tonnes; oil 500,000 barrels.
Source: 6:05 Markets calculations, as published in the report.
| Scenario | Canal assumption | JKM, US$ per MMBtu | BLNG3, US$ per day | BLPG3, US$ per tonne |
|---|---|---|---|---|
| Recovery | Capacity rises towards 32–36 transits a day | 22–26 | 45,000–60,000 | 275–325 |
| Base case | Renewed tightening to 28–30 transits a day | 27–31 | 70,000–90,000 | 350–400 |
| Severe constraint | A return towards 22–25 transits a day | 31–36 | 100,000–130,000 | 425–500 |
Bars share one scale within each column, starting at zero.
BLNG3 is the Baltic Exchange US Gulf to Japan LNG freight route; BLPG3 is Houston to Chiba LPG freight. Ranges are 6:05 Markets analyst estimates anchored to 2 October 2026 assessments. No probabilities are assigned.
Data and approach
The scenario ranges are analyst estimates anchored to the Baltic Exchange freight and period-charter assessments of 2 October 2026, a JKM reference price of US$25.18 per MMBtu, conditions observed during the 2023–24 El Niño and the cargo-cost sensitivities calculated in the report. The 28–30 transit base case is our forecast of renewed tightening, not the Panama Canal Authority’s announced operating plan.
Sources
- Panama Canal Authority, advisory of 28 September 2026
- EIA, Panama Canal flow and route estimates
- Baltic Exchange, LNG and LPG freight assessments
- NOAA Climate Prediction Center, El Niño Advisory
- Reuters, 1 September 2026
Read the full report for the complete analysis.
Read the full report at 6:05 MarketsDated analysis from 5 October 2026. Views and price ranges reflect the information available at the time and have not been updated. Nothing here is investment advice.