War-risk insurance costs surge for ships entering Strait of Hormuz

War-risk insurance premiums for ships crossing the Strait of Hormuz are still available, but they’ve climbed to record levels after Iran’s attacks on commercial vessels. 

Coverage now costs about 5% of a ship’s value, roughly five times higher than premiums charged earlier in the conflict, Bloomberg reports. For a tanker valued at $100 million, that rate implies an insurance bill of roughly $5 million for a single voyage.

The Strait of Hormuz normally carries about one-fifth of global oil shipments, making insurance coverage essential for tankers and other vessels transporting energy supplies from the Gulf.

The surge in insurance costs adds another financial barrier for shipowners weighing whether to send vessels through the strait that links the Gulf to global markets.

President Donald Trump has said the U.S. will make sure that ships are able to pass through Hormuz without saying exactly how. Details of a $20 billion reinsurance plan to help revive shipping are still unclear.