Panama Canal Drought Glencore Diverts Oil Tanker To South America

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He High Loyalty commissioned by ST Shipping —a subsidiary of Glencore— is currently sailing around South America, according to shipping and vessel movement data compiled by Bloomberg News. This detour will allow the ship to avoid the costs and unpredictability currently involved in crossing the canal, reports euro.ES Euro.

Panama Canal drought

The lack of water has led to a reduction in the number of vessels allowed to cross the passage between the Atlantic and Pacific oceans. This has increased freight costs and forced one company to shell out $3.98 million at an auction to reduce the queue of waiting ships.

The Glencore ship, which this month loaded refined oil off the western coast of Chile, crossed the Strait of Magellan, at the southern tip of Latin America. She will then pass through Argentina and Brazil and then arrive in New York. Currently, her arrival is estimated in mid-December.

A spokesperson for Glencore Plc declined to comment.

According to a statement from the Panama Canal Authority, last month the lowest water levels were reached since at least 1950, when records began. The lack of water means the number of reservation slots to cross the waterway will be reduced further in the coming months, down to 18 a day from February 1.

The rainy season in Panama usually starts in May and ends in November; However, during years when the El Niño phenomenon is active, like this one, the rains can be delayed and cause a long dry season, said the authority at the beginning of October.

The last time oil was shipped from Chile to the northeastern United States was in the spring of last year, according to data from Kpler, compiled by Bloomberg. That ship, the Aquila Transported petroleum products from the country to the New York area through the Panama Canal.

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Source: euro.ES Euro