(Bloomberg) -- An oil tanker carrying fuel to New York is adding thousands of miles to its journey in order to avoid disruption at the Panama Canal.
The High Loyalty, chartered by ST Shipping — a subsidiary of Glencore — is currently sailing round South America, according to shipping and vessel-movement data compiled by Bloomberg News. This diversion is allowing the ship to dodge the costs and unpredictability currently involved in passing through the canal.
See also: Panama’s Drying Canal Menaces Global Fuel Markets
A lack of water has led to a reduction in the number of vessels allowed to pass through the shortcut between Atlantic and Pacific oceans. That’s adding to freight costs and forced one firm to recently fork out $3.98 million in an auction to cut a queue of waiting ships.
Glencore’s vessel — which loaded refined oil off the west coast of Chile earlier this month — has passed through the Strait of Magellan at the southern tip of Latin America. It will then head up past Argentina and Brazil before arriving in New York. It’s currently signaling mid-December arrival.
A spokesperson for Glencore Plc declined to comment.
Last month saw the lowest water levels since at least 1950 — when records began — according to a statement from the Panama Canal Authority. The lack of water means the number of booking slots for passing the waterway will be further reduced in coming months, down to 18 per day from February 1.
“The rainy season in Panama typically begins in May and ends in November. However, during years when the El Nino phenomenon is active, such as this one, the onset of rains can be delayed, resulting in a prolonged dry season,” the authority said, back in early October.
The last time oil was shipped from Chile to the US Northeast was in spring last year, according to data from Kpler, compiled by Bloomberg. That ship, the Aquila L, carried petroleum product from the country to the New York area, passing through the Panama Canal and partly discharging en route.
--With assistance from Archie Hunter.
©2023 Bloomberg L.P.