Maritime insurers drop war‑risk coverage in Gulf amid Iran conflict disrupting shipping

Leading maritime insurers have withdrawn war‑risk coverage for vessels sailing in the Gulf as the intensifying Iran conflict has disrupted shipping and driven up freight rates.

At least 150 ships, including oil and liquefied natural gas tankers, have anchored in the Strait of Hormuz and nearby waters.

The crucial route, through which roughly 20 % of the world’s oil and an equal share of seaborne gas pass, has been effectively shut after the United States and Israel launched heavy air strikes on Iran on Saturday.

Several major marine insurers – Norway’s Gard and Skuld, the United Kingdom’s North Standard and the London P&I Club, and the New York‑based American Club – announced they are ending war‑risk policies for vessels operating in the area.

The withdrawal of coverage is expected to further discourage shipowners from navigating the Gulf. Insurers said war‑risk policies – which normally protect owners against costs and damage from war, terrorism and piracy – will be terminated for Iranian waters, the Gulf and adjacent seas, effective 5 March.

Transport costs surged as ships were rerouted and oil prices climbed sharply.

The Containerized Freight Index compiled by Trading Economics rose 6.5 % on Monday.

Freightos reported that terminal rates for a 40‑foot container from Shanghai to Jebel Ali in Dubai increased from about $1,800 on Saturday to roughly $3,700 on Monday.

DP World, which operates Jebel Ali, halted activities over the weekend after an aerial interception sparked a fire on Saturday night, though operations have since resumed.

Freightos noted that only 2 %–3 % of global container volumes transit the Strait of Hormuz, so its closure is unlikely to heavily affect the wider container market.

Nevertheless, with broader disruption in the region, including the Red Sea, it added: “For importers or exporters trying to move goods in or out of the Middle East, services will be markedly disrupted, and costs will rise for the cargoes that can still move.”

John Wyn Evans, head of market analysis at UK wealth‑management firm Rathbones, explained: “Any rate hikes stem from a mix of rerouting and higher oil prices; longer voyages reduce capacity, and when cargoes must arrive by a set date, ships are forced to sail faster, which consumes more fuel – the effect is exponential, much like accelerating a car and seeing mileage drop.”

Iran‑backed Houthi rebels in Yemen, who have paused attacks on Red Sea vessels since October, have signalled a possible return to strikes.

In response, several large carriers – Denmark’s Maersk, Germany’s Hapag‑Lloyd and France’s CMA CGM – have redirected all sailings away from the Red Sea until further notice, sending them around Africa. Denmark’s Norden has also suspended all its voyages.