Maritime Insurers Cancel War Risk Cover in Gulf, Impacting Energy Costs

Impact of Maritime Insurers Canceling War Risk Coverage

The recent cancellation of war risk insurance by maritime insurers in the Gulf region has significantly impacted shipping operations and energy costs. This decision follows heightened tensions between the US, Israel, and Iran, which have led to disruptions in the Strait of Hormuz.

Disruption in Shipping

Ships navigating through the Strait of Hormuz have faced serious threats, with at least five tankers damaged and two people killed. This has caused a backlog of around 150 vessels, creating delays and increased costs for global trade.

Increased Insurance Costs

War risk insurance premiums have surged, jumping from about 0.2 percent to as high as 1 percent of a ship's value. This has added significant financial burdens on shipping companies and could lead to even higher costs for oil and gas transportation.

Energy Market Implications

The closure of the Strait of Hormuz is exacerbating energy markets, with Brent crude futures rising by up to 13 percent. This has major implications for global fuel prices and supply chains.