Hormuz war risk drives sevenfold insurance spike, $40 bln global safety net for shipping
Bossy Abdel Gawad, Sunday 3 May 2026
The Strait of Hormuz has shifted from a key route for global trade into a major pressure point draining billions of dollars through war risk insurance costs, as rising geopolitical tensions reshape marine insurance dynamics and global shipping expenses.
A large container ship passes through the Suez Canal. Photo courtesy of UN Trade and Development.
Reports issued in April indicate that insurance exposures in the Gulf region, now beyond the capacity of private markets, have reached approximately $352 billion. This has prompted international intervention, with governments stepping in as insurers of last resort and deploying more than $40 billion in additional capacity to prevent disruptions to global trade flows.
The mounting insurance burden is not confined to balance sheets. The strait handles around 20 percent of global oil supplies, equivalent to roughly 21 million barrels per day, as well as nearly 30 percent of the liquefied natural gas trade. At the peak of recent escalation, Brent crude prices surged above $120 per barrel, while marine insurance premiums spiked sharply, rising tenfold on some routes.
This surge has been compounded by a wave of cancellation notices issued by major global reinsurers to reduce their exposure to high-risk zones.
The impact has extended beyond the shipping industry to consumers worldwide. According to International Monetary Fund estimates released in April 2026, the combined shock from higher energy and shipping costs linked to Hormuz tensions has added about 0.5 percentage points to global inflation, while potentially lowering global GDP growth to 3.1 percent.
Ahram Online spoke to industry leaders about the dynamics of war risk insurance in the Strait of Hormuz, exploring how transit risks are managed and who ultimately bears the cost of rapidly rising premiums.
Retired, living in the Scottish Borders after living most of my life in cities in England. I can now indulge my interest in all aspects of living close to nature in a wild landscape. I live on what was once the Iapetus Ocean which took millions of years to travel from the Southern Hemisphere to here in the Northern Hemisphere. That set me thinking and questioning and seeking answers.
In 1998 I co-wrote Millennium Countdown (US)/ A Business Guide to the Year 2000 (UK) see https://www.abebooks.co.uk/products/isbn/9780749427917
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