Gulf shipping crisis deepens as insurers pull war cover

Published: 03 March 2026. The English Chronicle Desk. The English Chronicle Online.

The Gulf shipping crisis has deepened after leading maritime insurers cancelled war risk cover across the region. The decision follows intense airstrikes by the United States and Israel on Iran, which have sharply escalated tensions in the Middle East. The cancellations have shaken global shipping markets and triggered fresh concern among traders and governments. Industry experts warn that the Gulf shipping crisis could soon affect supply chains far beyond the region.

At least 150 vessels, including oil and liquefied natural gas tankers, have dropped anchor. Many are waiting near the Strait of Hormuz, one of the world’s most vital maritime corridors. The strait carries roughly one fifth of global oil supplies and similar volumes of seaborne gas. Over the weekend, three tankers were reportedly damaged, and one seafarer lost his life. Those incidents have heightened fears that commercial vessels may become direct targets.

Several major mutual marine insurers confirmed they would withdraw non-poolable war risk cover. Among them are Gard, Skuld, NorthStandard, London P&I Club and the American Club. The cancellations apply to Iranian waters, the Gulf, and surrounding areas from 5 March. Shipowners must now seek alternative terms or suspend voyages entirely.

War risk cover usually protects shipowners against losses caused by conflict, terrorism, and piracy. Without it, vessels entering high-risk zones could face enormous financial exposure. Peter Hulyer of the broker Marsh explained that mutual P&I cover remains unaffected. However, reinstated war cover would come at sharply revised rates and strict conditions. That uncertainty has made many operators reluctant to proceed.

Insurance specialists say premiums could double or even triple within days. Current rates of around 0.25 percent may climb towards one percent of vessel value. During the 2022 invasion of Ukraine, rates surged as high as five percent for ships entering Odesa. The comparison underlines how quickly maritime insurance markets react to geopolitical shocks. Investors are now recalculating risk across the entire Middle Eastern corridor.

Freight markets have already responded with sudden price spikes. The Containerized Freight Index tracked by Trading Economics rose by 6.5 percent on Monday. Rates from Shanghai to Dubai more than doubled in forty eight hours. Data from the shipping marketplace Freightos showed a forty foot container rising from 1,800 dollars to nearly 3,700 dollars. Importers and exporters face higher costs almost immediately.

Operations at Jebel Ali, the region’s largest port, were briefly halted. The terminal is operated by DP World, a major global logistics company. An aerial interception caused a fire on Saturday night, prompting temporary suspension. Services have since resumed, though delays remain significant. Even short interruptions at such hubs can ripple through international supply chains.

Analysts note that only a small share of global container volumes transit the Strait of Hormuz. Freightos estimates between two and three percent of containers pass through the waterway. Yet the broader Gulf shipping crisis extends beyond container traffic. Oil and gas tankers form the backbone of energy trade, especially to Europe and Asia. Disruption in energy flows tends to have swift macroeconomic consequences.

John Wyn-Evans of the UK wealth manager Rathbones explained that rerouting vessels increases voyage times. Longer journeys reduce overall fleet capacity and raise fuel consumption significantly. If deliveries must meet strict deadlines, ships often sail faster and burn more fuel. That dynamic amplifies cost pressures across commodities and manufactured goods. Consumers could feel the impact within weeks if the conflict persists.

Security threats are also evolving beyond the Gulf itself. Iran-backed Houthi forces in Yemen have signalled a possible return to Red Sea attacks. Since October, such strikes had largely subsided, offering fragile stability. Renewed hostilities would compound the Gulf shipping crisis and stretch naval patrol resources. Shipping executives fear a prolonged period of unpredictable risk.

Several major carriers have already adjusted their routes. Denmark’s Maersk, Germany’s Hapag-Lloyd and France’s CMA CGM are diverting vessels around Africa. These longer passages add thousands of nautical miles and considerable expense. Denmark’s Norden has paused new business requiring Hormuz transit. CMA CGM has introduced emergency surcharges between 2,000 and 4,000 dollars per container.

Financial markets have reacted cautiously to the turmoil. Shares in marine insurer Beazley initially fell amid fears of heavy losses. The company operates within the Lloyd’s of London marketplace, which has also issued cancellation notices. Later, Beazley’s stock partly recovered after confirmation of a takeover agreement. Analysts at Jefferies suggested exposures appear manageable for now.

Energy specialists warn that tanker availability is tightening rapidly. Matthew Wheatley of Wood Mackenzie observed that many tankers are stranded or rerouting. Reduced capacity naturally lifts freight rates and reinforces volatility. Should hostilities continue, global oil benchmarks may remain elevated. European governments are monitoring the situation closely as winter stockpiles remain critical.

Diplomatic efforts are under way to contain escalation, though progress appears limited. Regional powers have urged restraint and protection of commercial shipping lanes. The United Kingdom has reiterated its commitment to maritime security partnerships. Naval forces from several countries maintain patrols near strategic choke points. Yet insurers base decisions on risk assessments rather than diplomatic assurances.

For British businesses, the Gulf shipping crisis presents immediate commercial challenges. Higher freight rates can squeeze margins for retailers and manufacturers alike. Energy price rises would add pressure to households already facing elevated living costs. Economists caution that supply chain disruptions can revive inflationary trends. The coming weeks may prove decisive in determining the scale of impact.

Despite uncertainty, some industry figures remain cautiously optimistic. Mutual insurers may reinstate cover under revised and higher premiums. Shipowners could gradually resume transit if security conditions stabilise. Markets often adapt quickly once clearer risk parameters emerge. However, sustained conflict would likely entrench higher structural shipping costs.

The Gulf shipping crisis underscores how interconnected global trade truly remains. A single maritime corridor influences energy security, consumer prices, and financial stability worldwide. As insurers reassess exposure and shipowners reconsider routes, the stakes continue rising. Governments, businesses, and households alike are watching events unfold with growing concern.

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