War risk premiums for a single tanker voyage have reportedly seen a 15- to 30-fold increase
The US-Israeli war with Iran has made the Strait of Hormuz the world’s most expensive waterway for shipping, as it has triggered a massive surge in war risk insurance premiums, according to Euronews.
Before the US-Israeli war on Iran, the Strait of Hormuz handled roughly 20% of the world’s seaborne crude oil. Now, Iranian retaliatory attacks on tankers, and Western insurers and shipping firms pulling back, have brought maritime traffic to a virtual halt.
Before the crisis, war risk insurance for a Gulf tanker was 0.02-0.05% of its value. Since February 28, premiums have soared to 0.5-1% or more, according to Euronews.
War risk premiums for a single voyage have jumped from roughly $40,000 to between $600,000 and $1.2 million for a typical tanker, the outlet wrote on Monday. At least 16 vessels have been hit since the conflict began, it noted.
Consumers will feel the knock-on effects of the surge at the pump or supermarket within weeks, it added.
The US has pledged naval escorts through the Strait, with US President Donald Trump urging oil-receiving nations to help secure the waterway.
However, even with naval escorts, companies will continue treating the waterway as a high-risk operating environment, Christopher Long, who works for a maritime security company called Neptune P2P Group, told Euronews.
Iran, meanwhile, insists that the Strait of Hormuz remains open for friendly or authorized ships. Talks with Iran are the most “effective way” to restart transit, Indian Foreign Minister S. Jaishankar said on Sunday, citing negotiations between New Delhi and Tehran that allowed two Indian-flagged gas tankers to pass through the strait as an example of diplomatic solutions.
Russia, a major crude oil exporter, is not a participant in the conflict and does not depend on the Strait of Hormuz to bring its oil to market. Its Urals blend reaches India via the Baltic and Black Seas, then through the Suez Canal and Red Sea – completely bypassing the Persian Gulf chokepoint.
While Russia and India have partnered with Iran to develop the International North-South Transport Corridor (INSTC) as an alternative route, its current use for significant crude oil shipments is minimal.
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The US has issued a waiver on Russian oil and petroleum products currently at sea, valid until April 11. India and several other countries immediately announced plans to purchase Russian crude under the exemption.
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