The Iran-Israel conflict has triggered a sharp rise in shipping insurance costs for vessels navigating the Red Sea and Persian Gulf.
CNBC, citing data from insurance broker Marsh McLennan, reported that the levied charge for ships sailing through the Gulf has risen to 0.2 per cent of a vessel’s value, up from 0.125 per cent before Israel attacked Iran last week.
Marsh McLennan also noted a rise in war risk insurance for the Red Sea, while coverage for Israeli ports has more than tripled to 0.7 per cent.
In addition, CNBC reported that the validity period for insurance quotes has been shortened from 48 hours to 24 hours by most insurers.
Amid ongoing violent exchanges between Iran and Israel, coupled with the enduring precarity of Red Sea shipping, maritime security across the Middle East remains elusive.
“Given that the situation is currently contained within the region, risks are still being placed to enable cargo to flow through these areas,” said Marcus Baker, Global Head of Marine, Cargo and Logistics at Marsh, in an interview with CNBC.
Jakob Larsen, Head of Security at BIMCO, stated earlier this week that the escalating conflict is raising concerns within the shipping community, resulting in a “modest drop” in the frequency of voyages through the region.
The Strait of Hormuz, a narrow corridor between Iran and Oman, connects the Persian Gulf to the Arabian Sea and is regarded as one of the most vital channels for global oil transportation. CNBC noted that even the slightest of disruptions in oil flow through this gateway can trigger sharp spikes in global energy prices, increased shipping costs, and significant supply chain delays.
