Shipping Paralysed in Strait of Hormuz as Insurance Costs and Energy Prices Surge
4972 Mins Read
Global shipping and energy markets are facing mounting disruption as vessels remain stranded near the Strait of Hormuz, a chokepoint that carries around one in five barrels of the world’s oil and gas.
Few ships are currently attempting passage through the Gulf corridor, given the ongoing hostilities and the strait’s proximity to Iran. Although Tehran has not formally closed the waterway, shipping traffic in the area has largely remained at anchor for fear of being targeted. The strait is around eight miles wide at its narrowest point, taking into account Iranian islands.
Late Monday estimates suggested at least 900 vessels were effectively trapped at sea. Three tankers have been damaged.
Insurance and Energy Costs Surge
The disruption is pushing maritime insurance premiums sharply higher. Marsh told Sky News that vessels already in transit remain covered for war risks, but policies may expire within 10 days and require renegotiation. The firm is in discussions with the owners of “dozens” of affected ships and warned premiums could rise by up to 100%.
Marcus Baker, global head of Marine at Marsh, said increases of 25%–50% had been expected before the weekend and prior to the tanker damage, but premiums could now double or rise further. Currently, war risk cover stands at about 0.25% of a vessel’s value — equivalent to $250,000 on a $100m ship.
The supply shock is also rippling through energy markets. Brent crude has climbed to $80.43 a barrel, its highest level since January 2025. Gas prices have reached 139.63 pence a therm, a year-long high not seen since February 2025 — marking a 22.7% jump on top of a 50% surge recorded the previous day.
Drone strikes across the Middle East and the effective paralysis of a key shipping artery are unsettling investors, with disrupted trade raising the prospect of sustained price increases.
