WAR risk insurance for British-flagged tankers that sail through the Middle East Gulf are finding that their premiums are being ramped up by tens of thousands of dollars.
One Red Ensign owner is said to have been quoted 0.8 per cent of hull value for a single trip, translating into an extra cost of US$500,000 in comparison with rates available to rivals, reported Lloyd's List.
Downing Street has advised the UK merchant shipping sector to avoid passing through the Gulf following the seizure of British-registered product tanker, Stena Impero, by Iran's Revolutionary Guards in the Strait of Hormuz last Friday.
With provisional reflagging to open registries available online within hours, the Red Ensign may now experience a further exit of tonnage, adding to the vessels it has lost already due to Brexit uncertainty.
Reports on Monday, the first business day after the arrest of Stena Impero, initially indicated that rates were holding firm, as the possibility of something of this nature happening had largely been priced in.
The situation is now different. As of midday on Wednesday, owners were generally paying twice as much for war risk cover than they did in the early months of this year, with British-flagged tankers at the higher end.
War risk premiums are assessed by the hull value of a vessel, which in the case of a five-year old very large crude carrier (VLCC) is $70 million, according to data from VesselsValue.
The ball park figure for the Middle East Gulf before the current escalation of tension was 0.02 per cent.
However, a new list of war risk areas was introduced on June 1, after attacks on four vessels in Fujairah on May 12.
By mid-June, following two further attacks, rates surged to between 0.15 and 0.4 per cent, a ten or even twenty-fold hike. Unconfirmed reports claimed some owners were asked for as much as 0.6 to 0.75 per cent per voyage.
One broker said that London market underwriters are now separating out bulkers and tankers, with bulkers getting quoted at 0.2 per cent, and most tankers quoted at 0.3 to 0.4 per cent.
Each tenth of a per cent is an extra cost of tens of thousands of dollars, equating to $70,000 for the average five-year-old VLCC.
'Different underwriters are taking different views,' a prominent broker was quoted as saying. 'Some are effectively considering dry cargo vessels as a lower risk. I haven't quoted British-flagged vessels, on the basis that the advice from the authorities is that they should sit tight and not go through.'
The broker added: 'We are in a weird position where anything British is a worse risk and therefore is being penalised financially.'
Better deals are still on the table from mutuals, according to Thomas Miller-managed UK War Risks managing director Rod Lingard.
Mr Lingard said that his club is still offering 0.2 per cent for a transit through the Strait of Hormuz, and 0.3 per cent for a transit plus a call at a local port within 14 days, unchanged from last week. It is not quoting more for UK flag shipping.
WORLD SHIPPING
One Red Ensign owner is said to have been quoted 0.8 per cent of hull value for a single trip, translating into an extra cost of US$500,000 in comparison with rates available to rivals, reported Lloyd's List.
Downing Street has advised the UK merchant shipping sector to avoid passing through the Gulf following the seizure of British-registered product tanker, Stena Impero, by Iran's Revolutionary Guards in the Strait of Hormuz last Friday.
With provisional reflagging to open registries available online within hours, the Red Ensign may now experience a further exit of tonnage, adding to the vessels it has lost already due to Brexit uncertainty.
Reports on Monday, the first business day after the arrest of Stena Impero, initially indicated that rates were holding firm, as the possibility of something of this nature happening had largely been priced in.
The situation is now different. As of midday on Wednesday, owners were generally paying twice as much for war risk cover than they did in the early months of this year, with British-flagged tankers at the higher end.
War risk premiums are assessed by the hull value of a vessel, which in the case of a five-year old very large crude carrier (VLCC) is $70 million, according to data from VesselsValue.
The ball park figure for the Middle East Gulf before the current escalation of tension was 0.02 per cent.
However, a new list of war risk areas was introduced on June 1, after attacks on four vessels in Fujairah on May 12.
By mid-June, following two further attacks, rates surged to between 0.15 and 0.4 per cent, a ten or even twenty-fold hike. Unconfirmed reports claimed some owners were asked for as much as 0.6 to 0.75 per cent per voyage.
One broker said that London market underwriters are now separating out bulkers and tankers, with bulkers getting quoted at 0.2 per cent, and most tankers quoted at 0.3 to 0.4 per cent.
Each tenth of a per cent is an extra cost of tens of thousands of dollars, equating to $70,000 for the average five-year-old VLCC.
'Different underwriters are taking different views,' a prominent broker was quoted as saying. 'Some are effectively considering dry cargo vessels as a lower risk. I haven't quoted British-flagged vessels, on the basis that the advice from the authorities is that they should sit tight and not go through.'
The broker added: 'We are in a weird position where anything British is a worse risk and therefore is being penalised financially.'
Better deals are still on the table from mutuals, according to Thomas Miller-managed UK War Risks managing director Rod Lingard.
Mr Lingard said that his club is still offering 0.2 per cent for a transit through the Strait of Hormuz, and 0.3 per cent for a transit plus a call at a local port within 14 days, unchanged from last week. It is not quoting more for UK flag shipping.
WORLD SHIPPING