Strait of Hormuz Chaos: Insurers Pull War Risk Cover Amidst Rising Oil Shipping Costs
The increasing Iran conflict has led marine insurers to cancel war risk coverage, causing a surge in oil shipping rates with three damaged tankers and many ships stranded in the Strait of Hormuz. While global oil prices jump, the trade industry braces for a challenging period ahead.
The widening conflict with Iran has led marine insurers to cancel their war risk coverage policies, further escalating oil shipping rates after recent turmoil in the Strait of Hormuz saw three tankers damaged and numerous vessels stranded. A seafarer was killed amid intensified regional tensions.
The critical Strait of Hormuz, through which one-fifth of the world's oil supply transits, has become an arena of navigation challenges due to retaliatory strikes between Iran, the U.S., and Israel. The disruption has prompted a 9% increase in global oil prices.
Leading companies have stated their intention to exclude war risk cover in Iranian and adjacent waters starting March 5. Expected increases in shipping costs, influenced by the regional tension, spell higher expenses for transporting oil from the Middle East to Asia, previously at six-year highs.
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