FOR much of the past five months, the focus of maritime security analysis has been on missiles, drones and military escalation. Increasingly, however, the most significant constraint on Middle East Gulf shipping may be neither physical attacks nor formal blockades, but the willingness of insurers to continue underwriting the risk.

War risk premiums for Strait of Hormuz transits have surged back into double-digits for some owners as renewed US-Iran hostilities and expanding Houthi attacks force insurers to reassess their MEG exposure. Brokers report that underwriters are now actively scrutinising Saudi-linked voyages, with some avoiding vessels connected to Saudi ports, cargoes or commercial interests altogether.

Reports that leading Lloyd’s market underwriters are considering suspending or restricting war risk cover for Saudi-related business in the Red Sea represent a potentially significant shift. If such restrictions become widespread, insurance availability could become as important a determinant of vessel movements as the security threat itself.

The implication is clear: commercial operators are no longer making decisions solely on the basis of military risk. Insurance availability, coverage certainty and rapidly rising premiums are increasingly shaping routing choices across the region.

That matters because the security environment is deteriorating simultaneously across the Middle East’s two critical maritime chokepoints. Neither the Strait of Hormuz nor the Bab el Mandeb is formally closed. Yet military activity, political uncertainty, insurance constraints and commercial risk have combined to reduce traffic through both waterways significantly.

Nearly five months into the conflict, the military balance has changed little despite sustained US operations. Iran has effectively established operational influence over navigation through Hormuz by compelling many commercial vessels to comply with Iranian-designated transit routes. Whatever the legal arguments surrounding freedom of navigation, commercial operators have largely prioritised risk management over principle.

At the same time, the Houthis have succeeded in opening a second maritime pressure point. What was originally a campaign against Israel-linked shipping has evolved into attacks on Saudi energy infrastructure and exports, placing renewed pressure on the Red Sea route that MEG producers have long viewed as an alternative to Hormuz.

The result is a conflict increasingly focused on commercial confidence rather than physical closure. Shipping companies are not being forced to stop using these routes; many are choosing not to.

This distinction matters. Markets can often adapt to physical disruption. Uncertainty is far harder to manage. As instability in Hormuz, the Bab el Mandeb and the Black Sea compounds, the cumulative effect on energy flows, trade routes and global supply chains continues to grow.

In that environment, the most consequential question for shipping may no longer be where the next attack occurs, but whether insurers remain willing to cover the voyage at all.

Richard Meade
Editor-in-chief, Lloyd’s List 

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