Military conflicts in the Middle East disrupt maritime trade as major insurers cancel war risk coverage for vessels in Iranian waters.
LONDON / SINGAPORE – The escalating military conflicts in the Middle East have begun to shake the financial backbone of global maritime trade. Leading marine insurance companies and P&I clubs have announced the cancellation of 'war risk' coverages that are critical for vessels navigating Iranian waters and the Persian Gulf. This decision indicates that the security risks in the region have reached an insurable level.
Consecutive Cancellation Decisions from Major Companies
As of March 1, industry giants such as Gard, Skuld, NorthStandard, London P&I Club, and American Club have made official announcements, stating that the cancellation decisions will take effect from March 5. From this date, vessels in the specified regions will be deprived of insurance protection in the event of a possible attack or seizure. Japan's largest insurance group, MS&AD, has also taken a similar step, confirming that it has suspended policies in the waters of Iran, Israel, and neighboring countries.
Tanker Queue at the Entrance of the Strait of Hormuz
Following the operations carried out by the US and Israel against military facilities in Iran over the weekend, the Tehran administration's closure of the Strait of Hormuz to navigation has led to significant chaos in the region. Vessel tracking data and satellite images show that at least 150 oil and LNG tankers have anchored in safe waters outside the strait, waiting. Ship traffic near the strategic port city of Fujairah in the United Arab Emirates has reached record levels, while many major oil companies and trading houses have decided to indefinitely halt their shipments.
Loss of Life and Damage Risks Triggered
The insurance sector's harsh move is driven by the recent hot conflicts and rising casualties. The death of a sailor over the weekend and significant damage to at least three oil tankers have pushed risk premiums to an uncontrollable level. Experts warn that it is financially impossible for a vessel without insurance coverage to operate in these waters, and this situation could lead to a permanent disruption in the global energy supply chain and sharp fluctuations in oil prices.
Source: SeaNews Türkiye
