Hormuz war-risk insurance spikes 1,900%, raises costs
War-risk premiums for tankers through the Strait of Hormuz have risen about 1,900%, pushing single-transit insurance on a $100 million tanker from roughly $250,000 to about $5 million.
War-risk insurance premiums for tankers crossing the Strait of Hormuz have climbed about 1,900%, increasing the single-transit insurance cost for a $100 million crude tanker from about $250,000 to roughly $5 million.
The increase follows a recent escalation of military activity in the region, including consecutive nights of strikes by U.S. Central Command. Devere Group’s analysis, using Lloyd’s Market Association figures, shows war-risk cover for large crude carriers rose from roughly 0.25% of hull value before the conflict to about 5% now.
On July 22, Brent crude traded above $94 a barrel, up nearly 4%, while West Texas Intermediate gained about 3.8% as traders assessed the risk of sustained shipping disruptions.
Underwriting costs reflect the immediate expense of operating in higher-risk waters and are separate from futures or spot oil prices. The premium increase raises freight insurance bills and adds to the cost of voyages through the waterway.
The U.S. Energy Information Administration estimates roughly 20.9 million barrels per day passed through the Strait of Hormuz in the first half of 2025, about 20% of global petroleum consumption and roughly one-quarter of seaborne oil trade. The International Energy Agency estimates about 80% of shipments through Hormuz are bound for Asian markets. Available pipeline alternatives can reroute only a limited share of those volumes.
Analysts warn that sustained higher war-risk insurance and related transit fees could increase freight costs for shippers and refiners, raise distribution costs for fuel and aviation, and reduce the number of tankers willing to use the route, which could tighten shipping capacity.
Nigel Green, CEO of Devere Group, commented: “When that premium rises by close to 1,900%, it tells you the people closest to the physical risk think the danger is real and current, not priced in on hope.”
Insurers, shipowners and traders are adjusting risk models and routing plans as military activity and diplomatic developments continue.
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