“We’re doing that as a preventive measure because we see that the rains are slowing down,” she said. “We want to make sure we are prepared.”

Heavy rains forced the authority to spill water from Gatun Lake in February, an unprecedented event, according to Espino de Marotta. Water-saving measures began in December 2025, six months earlier than the same cycle began in 2023.

Still, anxiety lingers because the canal is experiencing unusually high traffic volumes linked to the effective closure of the Strait of Hormuz due to the U.S.-Israel-Iran war. The closure redirected Atlantic Basin liquified petroleum gas and liquified natural gas demand toward U.S. Gulf Coast supply, with Panama offering the shortest route to Asian markets.

Source: Argus Media

Source: Panama Canal Authority

*Click on the charts for greater detail

Nick Watt, head of global freight pricing at Argus Media, said the result has been dramatic but not unexpected.

“It’s shown in the last few years that various events can lead pretty quickly to changing trade flows, and that has affected the Panama Canal,” Watt said.

While overall transits have increased, the added demand is most visible in surging auction prices. Each day, the ACP puts a limited number of passages up for auction, while vessels with reservations pay regular tolls.

ACP-sourced data cited by the Atlantic Council in May put the March-April average winning bid at roughly $385,000, nearly triple the pre-conflict average. In April, an LPG carrier reportedly paid more than $4 million for a transit through the auction system.

Ongoing talks between the United States and Iran could eventually result in the Middle Eastern waterway reopening, but pressure on the Panama Canal will remain. A full return to normal shipping operations will take months, assuming they fully recover at all.

Maritime historian Sal Mercogliano of Campbell University expects the demand pattern to outlast the immediate disruption, as shippers remain wary of the hazards involved in transiting the Strait of Hormuz.

“I don’t think the Persian Gulf goes back to the levels it was even prewar in the short term,” he said.

Still, the threat of another record-setting drought is difficult to dismiss. The National Oceanic and Atmospheric Administration says El Niño conditions are present and are expected to strengthen into the Northern Hemisphere winter of 2026-27. Historically, El Niño events have brought drier conditions to the isthmus.

Canal officials have described the amount of water used to operate the canal as 2.5 times the amount used by a city the size of New York. The same freshwater basin that the waterway relies on supplies drinking water to more than 2 million Panamanians, roughly half the country’s population.

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To meet the challenge, canal officials have undertaken an array of water-conserving measures at the canal over the past several years. Many grew out of a U.S. Army Corps of Engineers study of the canal’s water resources completed in 2023.

The verdict was blunt: “No single measure provides a complete solution.” Any viable plan, the Corps found, would require layered measures both inside and outside the canal watershed. The ACP’s assessment was similarly direct: “There is no silver bullet to this issue. That is why we are leveraging a multitude of action-oriented solutions.”

Those measures are starting to have an effect. They include:

• Cross-filling: Moving water between adjacent Panamax chambers, saving the equivalent of six daily transits, according to the ACP.
• Tandem lockages: Allowing two ships to transit at the same time in one chamber, when vessel sizes allow.
• New pipeline: A new potable-water pipeline drawing from the middle of the canal, where salinity drops, is scheduled to be completed in December 2026, easing pressure on the Miraflores water treatment plant.
• AI integration: The canal has begun experimenting with artificial intelligence for water-quality forecasting and ship-arrival modeling, an effort Espino de Marotta described as “baby steps.”

Eventually, the canal is counting on the creation of a new Rio Indio reservoir to shore up available water supplies. New strategies to maximize the canal’s waterborne throughput also are being explored. But most of these measures will not arrive until the 2030s at the earliest.