OIL REPORT23 October 2026 · 5 pages

Tanker attacks are repricing insurability across the Gulf trade

Assaults in and around Hormuz are no longer just lifting war-risk premiums. They are changing who can obtain cover, on what terms, via which routes, and with which crew and sanctions constraints. Flows have adapted, but through more conditional insurance, more complex routing and higher voyage friction.

Key takeaways

The key constraint has shifted from simple transit danger to insurability: hull war-risk pricing, non-poolable and charterers’ cover, and broader legal and operational participation are all under pressure, with Lloyd’s List arguing insurance may be shipping’s biggest Gulf constraint and war-risk premiums returning to double-digit percentages for some owners by late July 2026.
The insurance footprint now extends well beyond the Strait itself. The Joint War Committee widened listed areas on 3 March 2026 to include Bahrain, Kuwait, Oman, Qatar, Saudi Arabia’s Gulf coast and the UAE, meaning underwriting scrutiny and additional pricing can attach across a broader Gulf operating envelope.
Cover has not disappeared, but it has become more conditional and segmented. Mutual owner P&I backstops remained in place, while some non-mutual business including charterers’ liability, fixed-premium P&I and non-poolable extensions was cancelled and later partly reinstated on a buy-back, per-voyage basis.
Underwriters have had little reason to relax. The JWC says there had been almost 100 attacks on commercial tonnage by its latest update, while Bloomberg reported at least 23 incidents in or near the Strait in the first two weeks of October, including at least five engine-room impacts that raise loss severity as well as frequency.
Physical flows have adapted rather than vanished. EIA data show Hormuz oil flows fell from 21.6 mb/d in 4Q25 to 4.9 mb/d in 2Q26, but Bloomberg citing Kpler said Persian Gulf crude and condensate flows recovered to 24.6 mb/d in the week to 18 October, supported by convoys, shuttle legs and STS workarounds that themselves reshape insurance exposure.

Insurance is now shaping market access, not just voyage cost

The 2026 Gulf conflict has repriced risk across three layers: hull and war-risk pricing for each transit, P&I and charterers’ liability and other non-poolable cover, and the wider question of whether vessels, charterers, financiers and crews will participate at all. That is why the issue is increasingly insurance capacity and legal clarity rather than physical transit risk alone.
The Joint War Committee’s JWLA-033 of 3 March 2026 widened listed areas to include Iran, defined Gulf and Hormuz waters, and also Bahrain, Kuwait, Oman, Qatar, Saudi Arabia’s Gulf coast and the UAE. Entry into these areas requires notification to underwriters and pricing is individually negotiated, broadening the zone in which higher premiums and scrutiny can apply.
Multiple insurers cancelled key war-risk exposures in early March. Gard said reinsurers cancelled war risks in Iran and the Persian/Arabian Gulf effective 00:00 GMT on 5 March 2026 before automatic reinstatement on amended terms, while the American Club said the cancellation applied to non-mutual business including charterers’ liability, fixed-premium P&I and non-poolable extensions, later offering limited reinstatement on a buy-back and per-voyage premium basis.
The International Group of P&I Clubs said mutual owned cover still had access to Excess War P&I reinsurance that had not been amended, but owners typically also rely on separate Primary War P&I in the commercial market. The practical result is that some voyage structures remain insurable, though often with narrower terms, more bespoke clauses and greater execution friction.

Premiums and severity are keeping Gulf war-risk pricing elevated

The early-March repricing was abrupt. Lloyd’s List reported a four- or fivefold jump in premiums on 3-4 March 2026 after US and Israeli military action against Iran, while vessels loading or discharging in the Middle East Gulf without a Hormuz transit could still secure around 0.5%-1.0% for a seven-day trip. Bloomberg reported on 5 March that war cover for Hormuz crossings remained available, underscoring repricing rather than outright market withdrawal.
Pricing then proved sticky. Lloyd’s List reported after June ceasefire and reopening signals that insurers wanted solid evidence of durable safety before lowering rates, and by 27 July war-risk premiums for Hormuz transits had returned to double-digit percentages for some owners.
Rate discrimination is also affiliation-sensitive. Lloyd’s List reported on 3 March that US, UK and Israeli ships were being charged three times more than others for Middle East war cover, indicating that flag, ownership, operator and beneficial-interest links matter alongside geography.
Incident severity has become a central underwriting variable. UKMTO and Bloomberg reporting point to a sustained October attack tempo, with nine attacks logged by 6 October and at least 23 incidents in or near the Strait in the first two weeks of the month, including at least five engine-room impacts. Engine-room hits raise the risk of fire, loss of power and lengthy repair downtime, increasing salvage, delay, pollution and accumulation concerns.

Trade is adapting through costlier and more brittle voyage architecture

Bloomberg citing Kpler said Persian Gulf crude and condensate flows reached 24.6 mb/d in the week to 18 October, despite attacks. The adaptation has come through convoys and cargoes shuttled to tankers waiting outside the waterway, while Lloyd’s List also described cross-Hormuz strategies using shuttle trade to Gulf of Oman STS operations.
These workarounds reduce time spent by high-value tonnage in the tightest risk zone, but they add extra voyage legs and can stack liabilities around STS transfers. That changes where additional premium attaches and raises issues around co-assured status, indemnities and subrogation, which is why charterers have sought co-assured status as war risks test insurance norms.
The workaround network is itself vulnerable. Bloomberg reported on 12 October that at least 10 VLCCs and several Suezmaxes approaching Fujairah had stopped or reversed course, suggesting that if threats spread beyond the chokepoint the insurance burden migrates to the surrounding logistics system as well.
Crew and freight are now part of insurability. The ITF and JNG designated the Strait of Hormuz and surrounding waters a High Risk Area on 2 March, saying more than 200 vessels were anchored in or near the Strait, while Lloyd’s List later highlighted rising risk premiums, crew shortages and operational complexity. Freight has repriced alongside this: Lloyd’s List put Oman-China VLCC time-charter equivalent earnings at 141,198 dollars per day versus 115,137 dollars per day on US Gulf-China and 104,120 dollars per day on West Africa-China, while Bloomberg said benchmark Middle East tanker earnings were roughly 200,000 dollars per day higher than before the war began.

Sanctions and legal exposure are part of the insurance equation

OFAC published an alert on 1 May 2026 on the sanctions risks of Iranian demands for Strait of Hormuz passage and updated related guidance on 24 August. FAQ 1249 says payments or guarantees to the Government of Iran or the IRGC for safe passage would not be authorised for US persons or US-owned or controlled foreign entities, and could create sanctions exposure for others.
Treasury said on 27 May that it sanctioned Iran’s so-called Persian Gulf Strait Authority, describing it as an IRGC attempt to extort transiting vessels. The Joint War Committee also says a tolls clause became necessary to protect underwriters insuring vessels entering or leaving the Strait.
This matters because a passage payment is not just another cost item. It can affect claims recoverability, interact with sanctions clauses, and deter banks, insurers and charter counterparties from supporting a voyage, especially where trades are US-linked, dollar-cleared or Western-financed.

Scenarios

Adaptive trade case: Attacks continue but remain manageable enough for cover to stay available on a negotiated basis, with convoys, shuttle legs and STS transfers preserving flows. Oil remains supported by persistent security and logistics premia, but the bigger story is higher friction and a narrower pool of willing tonnage rather than outright physical closure.
Insurance squeeze case: Premiums stay elevated or widen further, buy-back and non-poolable cover remain difficult to secure, and crew and sanctions frictions intensify. In that setup, fewer owners and charterers participate, voyage timing becomes more erratic, and Gulf exports rely on a smaller and better-compensated fleet.
Severity shock case: A cluster of high-severity losses, especially engine-room hits, mining or multi-ship incidents, pushes underwriters to focus on salvage, pollution, detention and accumulation risk. The likely market effect would be tighter terms, broader exclusions or higher scrutiny even if the waterway remains physically open.

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Sources

GoldSquawk special reports are researched with the help of AI from the sources cited and reviewed before publication. For information only; not investment advice.