Hormuz Crisis Jolts Oil Market as Tanker Insurance Costs Surge

Escalating geopolitical tensions in the Middle East have triggered fresh volatility in global energy markets. Following U.S. and Israeli strikes on Iran, security threats in the region intensified, disrupting tanker traffic through the Strait of Hormuz — a strategic chokepoint responsible for transporting roughly 20 million barrels of oil per day.

The rising risk of attacks has led to a sharp increase in war‑risk insurance premiums for oil tankers operating in the area. Insurance costs that previously hovered around 0.125% of a vessel’s value per voyage jumped to roughly 0.2%–0.4%, while some insurers temporarily withdrew coverage altogether. As a result, several shipping companies delayed voyages and dozens of vessels waited outside the strait amid heightened uncertainty.

In response, the U.S. administration announced emergency measures aimed at maintaining the flow of energy supplies. The U.S. International Development Finance Corporation (DFC) will provide political risk insurance and financial guarantees for maritime trade in the Persian Gulf. In addition, the U.S. Navy could escort oil tankers through the strait if security conditions require it.

Market analysts say these steps may help stabilize shipping flows in the short term, but implementation could take time. Without reliable insurance coverage and security assurances, much of the global tanker fleet may remain reluctant to pass through the critical chokepoint, keeping oil markets sensitive to further geopolitical developments.