Manama, Bahrain. Insurance companies are cancelling war risk coverage for vessels in the Gulf as the widening Iran conflict disrupted shipping around the Strait of Hormuz. At least four tankers have been damaged, one seafarer killed, and about 150 ships stranded.
Shipping disruption in the Strait of Hormuz
Shipping through the strait between Iran and Oman, which carries around one fifth of oil consumed globally as well as large quantities of gas, has slowed to a near halt after vessels in the area were hit as Iran retaliated to U.S. and Israeli strikes.
Prices rise amid fears of prolonged closure
The disruption and concerns over a prolonged closure have pushed up oil and European natural gas prices, with Brent crude futures up more than 7% as the conflict triggered multiple oil and gas shutdowns in the Middle East.
About 150 vessels reported anchored
Shipping data showed that at least 150 vessels, including oil and liquefied natural gas tankers, had dropped anchor in the Strait of Hormuz and surrounding waters on Sunday.
Iran has said it has closed navigation through the waterway, prompting Asian governments and refiners to assess oil stockpiles.
Ship-tracking data from the MarineTraffic platform showed tankers clustered in open waters off the coasts of major Gulf oil producers including Iraq and Saudi Arabia, as well as liquefied natural gas producer Qatar.
Recent incidents involving multiple tankers
Projectiles hit the U.S.-flagged products tanker Stena Imperative in the port of Bahrain early on Monday, causing a fire that was later extinguished, according to two maritime security sources.
On Sunday, a projectile hit the Marshall Islands-flagged product tanker MKD VYOM, killing a crew member as the vessel sailed off the coast of Oman, its manager said. Two other tankers were also damaged.
Also on Sunday, a projectile hit the Gibraltar-flagged oil bunkering tanker Hercules Star off the UAE coast, manager Peninsula said. The tanker returned to anchorage in Dubai on Sunday morning and the crew were safe, Peninsula added.
Insurance coverage withdrawn and rates expected to rise
Marine insurers are cancelling war risk coverage for vessels, and oil shipping rates are expected to surge further.
How could the cancellation of war risk coverage affect your expectations for energy shipping costs?