Hormuz War-Risk Premiums Hit 6% of Hull Value; Shipping Traffic Halts

The Strait of Hormuz, a narrow chokepoint through which one-fifth of global oil consumption and a substantial share of liquefied natural gas transits, is witnessing a swift and worrying pullback in commercial shipping as the fragile ceasefire between the United States and Iran collapses. London’s marine insurance market—the barometer of maritime risk—is reporting a sharp drop in inquiries for war-risk cover to transit the waterway, with some underwriters and brokers also noting that premiums have crept higher from already elevated levels. While the evidence remains anecdotal, the signals are consistent: shipowners are increasingly reluctant to send vessels through a zone where exchanges of fire between two major military powers have resumed. On Thursday, July 9, 2026, publicly visible shipping traffic through Hormuz came to a near standstill, with few observable journeys taking place. Some owners who had recently made the passage said they were reconsidering future transits, and at least one firm canceled a planned voyage. Compounding the opacity, many vessels have been switching off their automatic identification system (AIS) transponders—a practice that obscures the true flow of traffic but also heightens the risk of collision and incident. The insurance implications are stark. In pre-conflict times, war-risk cover for a tanker passing through Hormuz cost a tiny fraction of a percent of the vessel’s value. Now, according to Marcus Baker, global head of marine at Marsh, the world’s largest insurance broker, rates have risen to a band of 2% to 6% of hull value. For a $100 million tanker, that means a premium as high as $6 million for a single transit—a cost that erodes margins even with customary no-claims discounts. This sudden spike in high-risk insurance, combined with the evaporation of quote requests, signals that the market is pricing in a non-trivial probability of a vessel being struck, detained, or blocked. The economic context magnifies the risk. The Strait of Hormuz handles about 20 million barrels of crude oil daily, linking Persian Gulf producers to global markets. Any sustained disruption would immediately lift benchmark crude prices, raise fuel costs for shipping, trucking, and aviation, and cascade into consumer prices worldwide. For energy-importing economies in Asia and Europe, which depend heavily on Middle Eastern oil and LNG, the unfolding risk threatens to undermine inflation containment and economic growth just as central banks were cautiously easing monetary policy. Moreover, the knock-on effects extend beyond hydrocarbons: many global supply chains, from automotive parts to consumer electronics, rely on containerized goods that transit via the Gulf to and from Asian manufacturing hubs. A prolonged period of closed or high-cost access to Hormuz would force logistics planners to reroute via longer and more expensive alternatives, such as the Cape of Good Hope, adding weeks of transit time and further straining already fragile global logistics networks. Looking ahead, the primary uncertainty is whether this pullback is temporary—a knee-jerk reaction to a fleeting flare-up—or the early phase of a more persistent and severe closure of the strait. The anecdotal nature of the insurance market data leaves room for interpretation, but the direction of travel is clearly toward higher perceived risk. If the military tit-for-tat between Washington and Tehran intensifies further, insurance rates could climb into double-digit percentages, effectively shutting the strait to all but the most risk-tolerant or military-escorted convoys. Such an outcome would be a body blow to global energy markets and a stress test for supply chain resilience strategies that have yet to fully recover from the disruptions of the early 2020s. For now, shipowners are voting with their rudders: staying away or turning off their transponders in an attempt to move invisibly. But that anonymity carries its own perils, and the next few days will reveal whether this is a temporary shock or the start of a full-blown maritime security crisis.