• Saudi Aramco seeks to reroute crude away from Strait of Hormuz
• China urges all sides to maintain safety along shipping route
LONDON/BEIJING: Insurance companies are cancelling war risk coverage for vessels in the Middle East Gulf as the widening Iran conflict disrupts shipping, leaving tankers damaged or stranded and at least two people dead.
Shipping through the Strait of Hormuz between Iran and Oman, which carries around one-fifth of oil consumed globally as well as large quantities of gas, has ground to a near halt after vessels in the area were hit as Iran retaliated against US and Israeli strikes.
One tanker in the region was ablaze on Monday, at least four others were damaged and about 150 ships were stranded. The disruption and fears of prolonged closure have caused oil and European natural gas prices to jump, with Brent crude futures up as much as 13pc as the conflict triggered multiple oil and gas shutdowns in the Middle East.
At least 150 vessels including oil and liquefied natural gas tankers had dropped anchor in the Strait of Hormuz and surrounding waters, shipping data showed on Sunday. About 10pc of the world’s container ships are ensnared in the broader backups, and cargo could soon start piling up at ports and transshipment hubs in Europe and Asia, Jeremy Nixon, CEO of container carrier Ocean Network Express, known as ONE, said. Iran has said it closed navigation through the critical waterway, prompting Asian governments and refiners to assess oil stockpiles.
The tankers were clustered in open waters off the coasts of major Gulf oil producers, including Iraq and Saudi Arabia, as well as LNG giant Qatar, according to ship-tracking data from the MarineTraffic platform.
Insurers cancel war risk cover
As a result of the incidents, marine insurers are cancelling war risk coverage for vessels, and oil shipping rates are set to surge further. Companies including Gard, Skuld, NorthStandard, the London P&I Club and the American Club said their cancellations would take effect from March 5, according to notices dated March 1 on their websites.
These cancellation notices mean shipping companies with vessels in the region will need to seek new insurance cover at higher rates to maintain policies. “As a result of this fast-moving situation, each underwriter is invariably increasing rates or in some instances, for vessels passing through the Strait of Hormuz, even declining to offer terms right now,” said David Smith, head of marine with brokers McGill and Partners.
Meanwhile, costs of shipping oil from the Middle East to Asia — already at six-year highs — are set to rise further as the widening Iran conflict is deterring shipowners from sending vessels to the region, market sources and analysts said.
Aramco to reroute exports
Saudi oil giant Aramco is attempting to reroute some of its crude exports to the Red Sea to bypass the Strait of Hormuz where the risk of attacks has slowed shipping to a near halt, sources said on Tuesday.
The world’s largest oil firm hopes to avert production cuts by rerouting oil to its Red Sea port of Yanbu but sources, including buyers, traders and analysts, said the East-West Pipeline had limited capacity and could become a target of attacks by Iran’s allies.
The pipeline has a capacity of 5 million barrels per day (bpd) and in 2019 was able to temporarily handle 7 million bpd after natural gas liquid pipelines were converted to carry crude. Saudi Arabia produced just over 10 million bpd of crude in January, according to OPEC secondary sources.
Aramco has informed some buyers of its Arab Light crude that they must load cargoes at Yanbu, three sources said, adding the company will assess demand and crude availability and inform the buyers. “There are logistical trade-offs involved, including the reduction of NGLs takeaway capacity and what rate the Yanbu crude terminal on the Red Sea can sustainably load vessels at,” said Richard Bronze, co-founder of consultancy Energy Aspects.
Shipping route safety
China called on all sides in the Middle East war to maintain safety in the Strait of Hormuz, a vital shipping route for oil and gas, and vowed measures to ensure its energy security.
“China urges all parties to immediately cease military operations, avoid further escalation of tensions, maintain the safety of shipping lanes in the Strait of Hormuz, and prevent a greater impact on the global economy,” foreign ministry spokeswoman Mao Ning told a regular news conference on Tuesday. “Energy security is of great importance to the global economy... China will take necessary measures to ensure its energy security,” she said.
Published in Dawn, March 4, 2026
