The combined effects of the El Ni帽o weather phenomenon, which has caused water levels in the canal to drop continuously, and heightened shipping demand due to the conflict with Iran, have driven auction prices for transit slots on the Panama Canal's key busy shipping lane to unprecedented levels.

As of this month, the average daily auction price for transit slots during the main lock operating periods in August has reached approximately $1.1 million, a surge of over 16 times compared to the average price during the same period last year. Since February 28, when the US-Israeli coalition launched airstrikes on Iran and the Strait of Hormuz was forced to close, the cost of canal transit has been steadily climbing.

The US National Oceanic and Atmospheric Administration has stated that the El Ni帽o phenomenon has been gradually developing since June, with its intensity increasing. This weather pattern leads to warming of surface waters in the Pacific Ocean, which can easily cause widespread severe drought and warmer winter temperatures. The intensity of this year's El Ni帽o is expected to be above normal levels.

The reason for the continuous rise in canal transit fees is that lower water levels restrict the cargo tonnage that freighters can carry, and the number of transit slots available later this year may also be reduced.

Ross Griffith, the head of freight pricing for the Americas at Argus Media, noted, "The immediate challenge is that the water levels are still dropping, which is unusual for the period from May to December."

This El Ni帽o event has already disrupted European inland waterway shipping, including the Rhine and Danube rivers, leading to the cancellation of several cruise routes and forcing cargo vessels to alter their itineraries.

The Strait of Hormuz handles about one-fifth of the global crude oil transportation. After this key energy waterway was shut down, Asian oil buyers have shifted to increasing purchases of crude oil and refined products from the US Gulf Coast, further boosting demand for Panama Canal transit and driving up auction prices.

According to data from Argus Media, in recent weeks, the average auction price for the canal's larger locks, which are accessible to large vessels, has reached up to $2.5 million, setting a historical record for auction prices across both types of locks.