The Panama Canal is an important waterway that connects two major oceans, the Pacific Ocean and the Atlantic Ocean. It was constructed to provide a shorter route for ships traveling between the east and west coasts of the Americas, avoiding the need to circumnavigate South America. The canal cuts through the Isthmus of Panama, a narrow strip of land that separates North America from South America. By linking the Pacific and Atlantic Oceans, the canal has greatly facilitated international trade and transportation, allowing ships to pass through without having to navigate around Cape Horn or the Strait of Magellan. Therefore, option 1, which states that the Panama Canal links the Pacific and Atlantic Ocean, is the correct answer.