Widening a Global Oil Chokepoint

on November 06, 2013 at 11:00 AM

Cable & Wireless

The Panama Canal is on the Energy Information Administration’s list of the world’s six global oil chokepoints. While the canal is the smallest of the six – moving just 700,000-800,000 barrels per day of crude oil and petroleum products from 2007 to 2011, compared to the 15-17 million bbl/d that transited the Strait of Hormuz – its smooth functioning remains vital to global energy markets.

“The blockage of a chokepoint, even temporarily, can lead to substantial increases in total energy costs.” – Energy Information Administration

The Panama Canal has lost some of its relevance as an oil transit route, according to the EIA. It is too small to accommodate many modern tankers. But an expansion project is on track for completion in 2015, which could augment its role in trade, both for oil and potentially LNG. The Panama Canal Authority recently said that the expanded canal could accommodate close to 90% of the world’s LNG vessels, which could have significant implications for future US exports from the Gulf Coast to Asia-Pacific markets.

Mercatrade.com has put together an infographic on the expansion project.