Gulf Tensions Disrupt Global Insurance and Shipping

Escalating hostilities in the Gulf region, stemming from conflicts involving the U.S., Israel, and Iran, are causing significant disruption to global insurance markets and shipping routes. Airlines are resuming limited flights, but substantial cancellations remain, while maritime insurers are cancelling war risk cover, leading to increased costs and rerouting of vessels.

Airlines Resume Limited Flights Amidst Airspace Closures

Several international airlines have begun to resume a small number of flights from the United Arab Emirates, offering some relief to travelers impacted by airspace closures and safety precautions. Etihad Airways, Emirates, and FlyDubai are operating select flights, but air traffic remains significantly affected following suspensions over the weekend. As of March 2, 2026, more than 80% of flights to and from Dubai and over half of those to and from Abu Dhabi were still cancelled, according to FlightAware [1]. Etihad Airways operated at least 15 flights from Abu Dhabi on Monday, evacuating stranded passengers to destinations including Islamabad, Paris, Amsterdam, Mumbai, Cairo, and London [1]. Emirates similarly initiated limited flights on Monday evening, though the extent of resumption remains unclear [1].

Maritime Insurance Faces Repricing and Cancellations

The conflict has triggered a major stress test for global insurers, particularly in the marine sector. War-risk underwriters have issued seven-day cancellation notices for ships transiting the Gulf and are preparing for substantial premium increases [2]. This is driven by the combination of cancellation rights, rapid repricing, and concentrated exposure, leading to increased underwriting volatility and credit risk [2].

Leading maritime insurers, including Gard, Skuld, NorthStandard, the London P&I Club, and the American Club, have cancelled war risk cover for vessels operating in Iranian waters, the Gulf, and adjacent waters, effective March 5, 2026 [3]. Standard marine hull policies exclude war risks, so shipowners typically purchase separate war-risk cover with seven-day cancellation provisions [2].

Shipping Disrupted, Strait of Hormuz Effectively Closed

Shipping through the Strait of Hormuz – a critical chokepoint for approximately 20% of global crude and seaborne gas – has largely halted [2]. At least 150 vessels, including oil and liquefied natural gas tankers, have dropped anchor in the strait and surrounding waters [3]. Reports indicate at least three commercial vessels near the strait were attacked on March 1, 2026, resulting in damage and one fatality [3], [4]. This has led to rerouting of vessels and surging freight costs [4].

Impact on Supply Chains

Rising tensions are forcing operational pullbacks and impacting supply chains. The disruption is expected to further dissuade shipowners from traversing the Gulf [3].