Strait of Hormuz Shipping Crisis: War Risk Insurance Costs Soar

The escalating conflict between the United States/Israel and Iran has brought maritime traffic through the Strait of Hormuz to a near standstill, triggering a surge in war risk insurance premiums and disrupting global trade. As of March 10, 2026, at least five tankers have been damaged, two personnel have been killed, and approximately 150 ships are stranded around the strait .

What’s Happening in the Strait of Hormuz?

Tensions dramatically increased following US and Israeli attacks on Iranian targets. In response, Iran’s Revolutionary Guard Corps (IRGC) declared the strait “closed,” threatening to set ablaze any vessel attempting passage . This has led to a significant disruption in shipping, impacting oil and natural gas prices, and creating logistical bottlenecks at ports in Europe and Asia.

The Insurance Impasse

Maritime insurers are cancelling war risk coverage for vessels in the Gulf, exacerbating the crisis. Before the recent conflict, hull war insurance prices for the Gulf region were around 0.25% of a ship’s value . But, with the heightened risk, premiums have surged, with some tanker costs jumping by $7 million .

While some insurance remains available, particularly war insurance, coverage is increasingly limited, with the most comprehensive policies being unavailable for ships linked to the United States and Israel . This leaves ship owners and operators facing difficult choices: absorb the exorbitant insurance costs, risk operating without adequate coverage, or reroute vessels, adding significant time and expense to voyages.

Impact on Global Trade and Energy Markets

The disruption in the Strait of Hormuz, a critical chokepoint for global oil and gas supplies, is already having a ripple effect on energy markets. Brent crude futures have risen as much as 13 percent, and European natural gas prices have also increased . Approximately 10 percent of the world’s container ships are currently experiencing backups, potentially leading to cargo pile-ups at ports in Europe and Asia .

Looking Ahead

The situation in the Strait of Hormuz remains highly volatile. The potential for further escalation and prolonged closure of the waterway poses a significant threat to global trade and energy security. The long-term impact will depend on the resolution of the conflict and the restoration of safe passage for commercial vessels.