On March 2, 2026, a commercial ship anchors off the coast of the United Arab Emirates due to a navigational disruption in the Strait of Hormuz in Dubai.
Stringer | Anadolu | Getty Images
The cost of oil supertankers in the Middle East has risen to record levels as the conflict between the US and Iran disrupts shipping through the strategically important Strait of Hormuz.
Major maritime war risk providers have begun withdrawing insurance from ships operating in the Persian Gulf, as the region’s main shipping lanes are disrupted in the aftermath of the sudden security crisis.
The benchmark freight rate for very large crude carriers (VLCCs) transporting 2 million barrels of oil from the Middle East to China hit a record high of $423,736 per day on Monday, according to LSEG data. This is an increase of more than 94% from Friday’s closing price.
In addition to a significant jump in oil and gas prices, the weekend’s attack on Iran by the United States and Israel has led to a stratospheric rise in the cost of shipping crude oil. The escalation of the conflict has effectively halted shipping traffic through the Strait of Hormuz, one of the world’s most important oil chokepoints located in the Gulf between Oman and Iran.
A senior Iranian Revolutionary Guard official said on Monday that the Strait of Hormuz would be closed and warned that ships attempting to pass through the waterway would be attacked, state media said. That claim has since been disputed by U.S. Army Central Command Centcom, Fox News reported.
“Even though the Strait of Hormuz has not been officially closed, multiple incidents have increased the threat level around the Strait of Hormuz, leading charterers in the VLCC segment to exit the market and avoid securing vessels,” Sheru Bhattacharjee, head of European freight and pricing at Argus Media, told CNBC via email.
Citing market sources, Bhattacharjee said Middle Eastern oil producing countries had not yet announced any suspension of production or loading, and ports in the UAE, Oman and Kuwait remained operational.
“However, most ship owners avoided transiting the Strait of Hormuz as insurance companies removed war risk coverage for ships in certain parts of the region,” Bhattacharjee said.
According to Argus Media, it is estimated that around a third of maritime crude oil trade moves through the strategically important waterway, along with 19% of global liquefied natural gas (LNG) flows and 14% of global refined products trade.
Insurance companies discontinue war risk coverage
In recent days, major marine insurance companies have canceled war risk coverage for ships sailing through the Middle East following reports of attacks on multiple ships transiting the Strait of Hormuz.
In addition to New York-based American Club, marine insurers including Norway’s Gard and Skuld, Britain’s North Standard and London’s P&I Club have also announced they will scrap war risk coverage for ships in the region.
Even if oil tankers were temporarily cut off from the Strait of Hormuz, global energy prices could rise sharply, raising transportation costs and causing significant delays in supply.
The Strait of Hormuz is also key to the world’s container trade. The region’s ports, such as Jebel Ali and Khor Fakkan, are specialized transshipment hubs that serve as transit points in global networks.
Shipping giants such as MSC and Maersk, Hapag Lloyd The CMA CGM also issued new guidelines to prioritize safety amid the deteriorating security situation.
Maersk, widely known as the barometer of global trade, announced on Monday that it will no longer accept special cargo in or out of the United Arab Emirates, Oman, Iraq, Kuwait, Qatar, Jordan, Bahrain and Saudi Arabia until further notice.
The company previously announced that all routes from the Middle East – India to the Mediterranean and from the Middle East – India to the East Coast of the United States would be rerouted through the Cape of Good Hope.
