Rising Insurance Costs for Tankers Signal Heightened Risk at Strait of Hormuz
Brent crude prices rose nearly 4% to $94.23 per barrel amid ongoing U.S.-led strikes against Iran, but a more telling indicator is the surge in war-risk insurance premiums for tankers passing through the Strait of Hormuz. These costs have jumped from around 0.25% to approximately 5% of vessel value—nearly a 1,900% increase—for large crude carriers transiting the region. The sharp rise reflects insurers' assessment that physical risks are increasing significantly due to ongoing military operations and stalled diplomatic efforts. This could lead some operators to avoid using the Strait altogether if costs remain high, potentially causing supply disruptions in global energy markets and contributing to inflationary pressures. Beyond oil prices, broader financial markets have also reacted: during a similar escalation last year, both the S&P 500 and Nasdaq fell sharply. Meanwhile, gold has underperformed as an expected safe-haven asset due to expectations of continued Federal Reserve tightening.
Topics: commodity market risks oil prices Strait of Hormuz war-risk insurance