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Ships attemping passage through the Strait of Hormuz are increasingly having to coordinate with Iranian authorities, as rising risks and surging insurance costs change how traffic moves through the waterway.
Access is no longer straightforward for many vessels.
Thailand said on Tuesday one of its oil tankers, owned by Bangchak Corporation, had passed through the strait after talks with Iranian authorities, while a second vessel remains waiting for clearance alongside other ships seeking safe transit.
Recent attacks and ongoing uncertainty have left shipowners deciding whether to enter the waterway at all, with decisions now shaped by both safety risks and rising costs.
War risk insurance premiums have surged since the escalation began on February 28, with rates rising several-fold in a matter of weeks.
David Osler, finance editor at Lloyd’s List, said, “Before the fighting, the typical rates for Strait of Hormuz were 0.15% to 0.25% of hull value for a one-week policy. Since the conflict began, quotes are as high as 5% to 10% of hull value.”
For a very large crude carrier worth around $100 million (€90 million), that can mean several million euros in additional costs for a single transit.
Insurance is still available, but often at levels that make transits significantly more expensive and harder to justify.
“If they want to make the trip – and can find a crew that will agree to do the job – they are not being held back by lack of insurance,” he said.
Instead, decisions are being driven largely by safety concerns.
Maritime specialist Mustapha Zehhaf said some shipping companies are avoiding the strait altogether due to the risks.
He said vessels that do transit are adjusting their routes and, in some cases, sailing closer to the Iranian coast.
Shipping under pressure
Higher insurance costs and security risks are forcing shipowners to reassess whether to transit the strait at all.
There are few alternatives. Pipelines such as Saudi Arabia’s East-West route or the UAE’s Fujairah line can bypass Hormuz to some extent, but most exports still depend on it.
If the situation continues, energy analyst Bill Farren-Price, head of the gas programme at the Oxford Institute for Energy Studies, said it would amount to a supply shock for global energy markets.
Prices are expected to rise as supply tightens and shortages begin to feed through, before higher costs start to curb demand.
He also said there was no realistic military way to fully secure the strait and little sign of a diplomatic solution in the near term.
He said, “Much worse — this was always the Armageddon scenario.”