It is estimated that some 20-30% of global oil and gas transits via the Straits of Hormuz. The Joint Maritime Information Center (JMIC) in consultation with UKMTO describe the overall maritime risk level as ‘CRITICAL’, despite there being no formal closure of the Strait of Hormuz.
Whilst noting the immediate issues facing the shipping industry in terms of re-routing of vessels and claims ranging from alleged deviation rights, safe port warranties and GPS jamming, the insurance industry has been swift to react. Notices of Cancellation were noted to have been given over the weekend in respect of War Risks coverage excluding Persian / Arabian Gulf waters. The position on rates for those committed to providing buy-back coverage is subject to continuing upward movement.
As intimated in our Global Risks Horizon Scanning report the potential for further disruption in the Red Sea should not be dismissed. Renewed Houthi activity in Red Sea will have a significant detrimental effect on global trade should the escalation continue.
