Amid escalating clashes in the Middle East following U.S. and Israeli strikes on Iran and Iran's retaliation, insurance premiums for ships transiting the Strait of Hormuz have surged to nearly 12 times their previous levels.
According to the Financial Times (FT) on the 4th (local time), insurance premiums for ships sailing through the Strait of Hormuz—the world's largest crude oil shipping lane—and adjacent waters have jumped from about 0.25% of a vessel's value to as high as 3% after the strikes. In such cases, a ship worth $100 million faces premiums of $250,000 to $3 million per voyage.
Industry sources said shipowners are receiving premium quotes running into the millions of dollars just to traverse the strait, while some shipments are being denied coverage altogether, forcing cancellations of sailings. Since the 28th, when the strikes began, insurers have been canceling existing policies and pushing for re-enrollment at higher rates, or outright refusing to provide services for ships transiting the Strait of Hormuz.
Currently, ship insurance premiums in Middle Eastern waters are averaging about 1%–1.5% of a vessel's value. Dylan Mortimer, a partner at global insurance broker Marsh, said, "For ships linked to the United States, the United Kingdom, and Israel, there have been cases where premiums quoted were up to three times higher than that."
Earlier, U.S. President Donald Trump floated a U.S. Navy support option to cushion the maritime trade shock from a potential closure of the Strait of Hormuz, but it appears to have had little effect.
On the 4th, Trump wrote on his social media (SNS) Truth Social that "the U.S. International Development Finance Corporation (DFC) will support insurance and guarantees for energy transport vessels in the Gulf," adding, "If necessary, we will begin U.S. Navy escorts for tankers." However, industry voices noted lingering doubts about U.S. support.
David Smith, a partner at marine insurance specialist broker McGill, expressed dismay, saying, "No additional information has been provided beyond the post on Truth Social." Smith said, "President Trump flagged government support for energy transport vessels in the Gulf, but did not define the actual scope in concrete terms," adding, "For example, we cannot be sure whether the rules would apply if a European ship is carrying China-sourced crude."
Some predict that even if DFC support materializes, it will be difficult to fundamentally resolve the situation. DFC's primary role is to catalyze private investment in developing countries, which limits its ability to address military risks or a spike in freight rates.
Ed Finley Richardson, head of shipping investment firm Contango Research, said of Trump's message that it "looks more like political rhetoric aimed at easing the rise in oil prices," adding, "Even without DFC, shipowners already carry insurance, and they are paying closer attention to attack risks and soaring freight rates."
Tanker rates are in a steep climb. According to the London Stock Exchange Group, the daily rate for very large crude carriers (VLCCs) on the Middle East–China crude route reached $493,100, jumping more than 16% in a single day. On top of that, longer distances from rerouting are adding to volatility, which is expected to persist for the time being.
Some analysts warn that if the U.S. military provides escorts, U.S. warships themselves could become targets, backfiring. A maritime security expert said, "If U.S. warships enter the strait before Iran's naval capabilities are sufficiently degraded, the situation could become very dangerous," adding, "The appearance of U.S. warships would draw all Iranian missiles toward those vessels."