Marine insurers are cancelling war risk coverage for vessels and oil shipping rates are set to surge further after the widening Iran conflict has left some tankers damaged and hundreds of ships stranded around the Strait of Hormuz.
Iran has responded to the US and Israeli strikes by retaliatory attacks that have massively increased the risks to commercial shipping in recent days.
In the Strait of Hormuz at least 150 vessels including oil and natural gas tankers have dropped anchor and come to a standstill. Typically ships carrying oil sail through the Strait along with tankers hauling diesel, jet fuel, gasoline and other products. The disruptions has sparked a 9% jump in global oil prices so far.
Following this, insurers are cancelling the war risk cover. War risk cover will be excluded in Iranian waters, as well as the Gulf and adjacent waters. Many have suspended underwriting of a range of insurance policies covering war risks in the waters around Iran, Israel and neighbouring countries.
Meanwhile, costs of shipping oil from the Middle East to Asia which are already at six year highs are set to rise further. Spot shipping rates from the Middle East to Asia, more commonly known as TD3C , are expected to extend gains, shipbrokers said. The benchmark has nearly tripled since the start of 2026.
The market will need more ships to load crude from the U.S. and West Africa on longer voyages which could support freight on those routes.
If insurers can’t confidently price war risk amid Iran’s escalation, the shock could ripple through global reinsurance, creating uncertainty like in 2008 and COVID.