War Risk Multiplies Tanker Insurance Costs and Doubles Oil Shipping Times, Analyst Says

### A maritime risk shock reaches the energy market

The disruption of shipping routes around the Strait of Hormuz and the Bab al-Mandab Strait has created effects that extend well beyond the immediate movement of vessels, according to energy analyst Ehsan Janabi in an interview with Iran’s IRNA news agency.

Janabi said war-risk insurance for oil tankers had risen tenfold, while rerouting vessels around Africa had increased the time required to transport oil cargoes from 17 days to 35 days. In his assessment, the higher cost and longer duration of maritime transport are feeding directly into energy prices and could continue to affect fuel and petroleum-product markets for months.

The claims come amid reported disruption to tanker traffic in the two strategic waterways. Janabi described the consequences as a structural change in the economics of maritime energy transport rather than a temporary increase in freight costs. When the security of a shipping route deteriorates, he said, risk itself becomes a tradable cost whose price fluctuates with military and diplomatic developments.

The Strait of Hormuz, the Suez Canal, the Bab al-Mandab Strait and the Strait of Malacca are among the principal maritime routes used to transport energy. Janabi said that roughly 60 percent of the world’s crude oil and petroleum products move by ship from production and export centers to refineries and consumer markets, with the remainder transported through pipelines. That makes the cost and reliability of tanker transport an important factor in energy pricing.

### Insurance becomes a direct cost of every voyage

According to Janabi, war-risk insurance for tankers previously stood at approximately 0.05 percent of the value of a cargo. Under current conditions, he said, the rate had risen to at least 0.5 percent—an increase of ten times.

He gave the example of a tanker valued at $120 million. Before the reported escalation, insurance for a voyage cost about $40,000, he said. That figure had risen to approximately $600,000 per trip. The additional expense is ultimately incorporated into the cost of transporting each barrel of oil, adding pressure to the price paid by refineries and other buyers.

Janabi also said that the maritime insurance market in London was facing greater difficulty in pricing risk. Whereas vessels previously had as much as 24 hours to finalize insurance rates, he said, the period had been reduced to 12 hours because security conditions could change rapidly.

The higher premiums create a choice for shipping companies: accept the risk of operating through a threatened waterway or take a longer alternative route. Janabi argued that neither option is economically attractive. A direct route entails higher insurance and security exposure, while a safer route increases fuel consumption, voyage time and the amount of capital tied up in cargoes at sea.

Some vessels, he said, may be unable to absorb both the cost of operating and the higher insurance premiums, leading owners to decline cargoes altogether. A reduction in the number of completed voyages would constrain energy trade, while cargoes that are shipped would arrive with substantially higher transport costs.

### Rerouting around Africa stretches deliveries

The reported restrictions affecting tankers and Saudi-linked vessels in the Bab al-Mandab Strait have forced some ships to take routes around the African continent, according to Janabi. That change has increased the estimated transport time for oil cargoes from 17 days to 35 days.

The longer voyage delays the arrival of oil and gas at importing countries’ refineries. Janabi said refineries often plan their operations around delivery schedules established when contracts are signed. If a delivery window expands from 17 to 35 days, and the delay becomes even longer, some facilities could face the possibility of emergency shutdowns.

A longer voyage also requires more fuel to move the cargo. The result is a higher delivered cost for crude oil and petroleum products, which can then be passed through to fuel prices and other products made by refineries. Janabi estimated that the inflationary impact could remain visible across the oil and gasoline supply chain for between six and nine months.

He said tanker fuel systems were generally designed for voyages of up to about 20 days. Extending a journey to 35 days could therefore create operational problems, including the risk that vessels would not carry enough fuel for the longer route. This would add another layer of complexity to a shipping system already operating under elevated insurance and security costs.

### Oil prices face both physical and psychological pressure

The analyst said attacks or threats involving large tankers can affect energy markets even before a physical shortage emerges. The identity of a cargo may be less important than the fact that a major vessel has been targeted, because such incidents can immediately affect perceptions of supply security and disrupt calculations of future supply and demand.

In his view, a sustained series of attacks could produce sharper increases in benchmark crude prices. He also said market psychology played a significant role: statements threatening new action by the United States could increase tension, while mediation efforts and talks with Iran could reduce pressure in the market.

Janabi compared the current risks with market reactions during crises in 2019 and 2020. He said an initial response could take the form of a speculative increase of $10 to $20 per barrel, while the more lasting effect would emerge if insurers maintained high war-risk premiums and rates for very large crude carriers rose three- or fourfold in a single day.

Under that scenario, he estimated that the cost of shipping a barrel of oil from the Persian Gulf to Asia could increase from about $2 to at least $6. He also said Brent crude could remain near a short-term floor of $95 per barrel while tensions continued, unless alternative routes and pipelines provided greater stability.

These price projections were presented by Janabi as an assessment of possible market conditions, not as a guaranteed outcome. Their realization would depend on the duration of the disruption, the availability of alternative infrastructure, the behavior of insurers and shipping companies, and developments in the conflict and diplomatic negotiations.

### LNG has fewer alternatives than oil

The implications are potentially more severe for liquefied natural gas. Unlike oil, which can in some circumstances be redirected through existing or newly built pipelines, LNG depends on specialized ships and terminals for maritime transport.

Janabi said there was effectively no pipeline alternative for the LNG flows affected by the Strait of Hormuz. Any rerouting of LNG carriers could add at least 15 days to transit times. He estimated that LNG prices in Japan and South Korea could rise from $12 to $25 per million British thermal units under such conditions, placing pressure on petrochemical industries and household consumers.

Even a disruption lasting only one week could force Asian refineries and energy buyers to seek LNG from other sources, including the United States, he said. Additional purchasing from alternative suppliers could in turn intensify competition in the global gas market and raise prices beyond the directly affected region.

The argument highlights the different degrees of flexibility available to oil and gas markets. Oil can often be redirected through a combination of pipelines, storage and alternative shipping routes. LNG requires specialized vessels and infrastructure, limiting the speed with which buyers can replace delayed cargoes.

### Strategic reserves and pipelines offer partial relief

Countries that consume oil may respond to price increases by releasing strategic petroleum reserves. Janabi described such releases as a reaction to higher prices rather than a permanent solution to disrupted shipping.

Some countries are also seeking to use existing pipelines or build new ones to move oil around maritime chokepoints. He cited Saudi Arabia’s East-West pipeline as an example of infrastructure that can transport part of the country’s oil without relying on the Strait of Hormuz.

Pipeline projects, however, require substantial financing and time. They cannot immediately replace the volume and flexibility provided by tanker traffic. Janabi said that if the parties involved remained entrenched, negotiations reached an impasse and alternative pipelines were not completed, global fuel prices could remain elevated.

The analyst said the consequences of insecure waterways should therefore be viewed across the entire energy price curve. Damage to vessels, delays in deliveries and uncertainty over future shipping conditions can influence prices not only in the spot market but also in contracts for future months and seasons.

### Reported decline in vessel movements

Janabi said that at least 75 vessels, including tankers and non-tanker ships, had been targeted since the beginning of what he described as the U.S. offensive against Iran more than six months earlier. He also referred to a recent Reuters report, saying that only seven vessels had passed through the Strait of Hormuz on the previous Thursday.

According to the figures he cited, U.S. sources had estimated an average of about 15 vessels a day over the preceding 15 days. Before the reported conflict, however, as many as 125 large commercial vessels had passed through the waterway each day. Janabi presented the difference as evidence of a severe decline in maritime traffic.

He added that claims of a safe corridor in the Omani section of the route had not been enough to reassure vessel owners. High insurance premiums and continuing security concerns had discouraged companies from accepting cargoes in the area.

The disruption is not limited to Hormuz, he said. Damage or threats affecting energy infrastructure and export routes in several locations have widened the risk for shipowners, traders and consumers. The simultaneous pressure on the Bab al-Mandab route has also increased concern over Saudi Arabia’s oil and commercial shipping plans, much of which had been organized around access through the Red Sea.

### China’s demand decisions can amplify market swings

Janabi also pointed to changes in the balance of influence in global oil markets. In the past, he said, the Organization of the Petroleum Exporting Countries played a central role in managing supply, with Saudi Arabia often acting as a swing producer by reducing or increasing output to support market balance.

He argued that China now performs a different but increasingly important stabilizing role through demand management. When prices begin to rise, China may reduce or pause purchases; when prices fall, it may increase buying and replenish strategic inventories. In this way, China’s purchasing decisions can influence price movements and reduce the extent to which OPEC alone determines market direction.

That dynamic could become more significant during a shipping disruption. If higher freight and insurance costs push prices upward, weaker Chinese demand could limit part of the increase. Conversely, purchases to rebuild inventories could reinforce a recovery in prices if crude becomes cheaper or if buyers anticipate further disruption.

### A wider test for global energy security

The events described by Janabi illustrate how a maritime security crisis can travel through the energy system. The first effect may be a higher insurance premium. The next may be a longer voyage, greater fuel consumption and delayed delivery. Those costs can then reach refineries, fuel distributors, industrial users and households.

The resulting pressure is not confined to the countries immediately surrounding the affected waterways. Oil and LNG are traded through interconnected markets, and buyers may compete for cargoes from alternative suppliers when a major route becomes unreliable. This can raise prices even in regions that are physically distant from the conflict.

For now, the outlook depends on whether shipping through the Strait of Hormuz and Bab al-Mandab returns to normal, whether alternative pipelines can provide additional capacity, and whether diplomatic efforts reduce the security risk faced by vessels. If disruptions persist, Janabi’s analysis suggests that insurance, freight and fuel costs will remain linked to the wider conflict.

The central issue is therefore not simply the price of transporting one cargo. It is whether the world’s energy supply chains can continue to rely on a small number of strategic maritime chokepoints when the cost of navigating them becomes uncertain, volatile and, in some cases, prohibitive.