Strait of Hormuz Shipping Insurance Costs Surge After ADNOC Tanker Attacks

Drone attacks on two ADNOC tankers in the Strait of Hormuz late Thursday into Friday have pushed war risk shipping insurance premiums to levels that were unthinkable before 2026. For Gulf shipowners, insurers and oil traders, the financial cost of moving crude through the world’s busiest oil chokepoint is now rising almost as fast as the political temperature.

Key takeaways

• War risk premiums for Hormuz transits have climbed to 3 to 10 percent of a vessel’s hull value, up from about 0.25 percent before the conflict, according to Marsh.
• A $100 million tanker now costs $3 million to $10 million in war risk cover per voyage, versus roughly $250,000 previously.
• Daily tanker traffic through the strait, normally 120 to 140 vessels, has at times collapsed to as few as two tankers a day.

What happened in the Strait of Hormuz

The two ADNOC tankers were struck by drones on the evening of Thursday, August 13, into Friday, August 14, while transiting the Strait of Hormuz, the narrow waterway between Iran and Oman through which roughly a fifth of the world’s oil passes. The UAE’s Foreign Ministry blamed Iran directly, calling the strikes a “flagrant violation” of freedom of navigation principles under the United Nations Charter, Al Jazeera reported.

Britain’s UK Maritime Trade Operations center, which tracks incidents in the region, confirmed both vessels suffered only minor damage and there were no casualties, according to the Las Vegas Review-Journal. Newsmax reported the attack marks the latest in a string of strikes on UAE-linked tankers this year, following earlier incidents in June and July.

Why insurance costs matter more than the damage itself

The physical damage from Thursday’s strikes was limited. The financial damage is not. Marcus Baker, global head of marine, cargo and logistics at Marsh, told S&P Global that war risk premiums for vessels transiting Hormuz have surged to between 3 percent and 10 percent of a ship’s hull value, compared with roughly 0.25 percent before the war began.

Run the numbers on a typical $100 million tanker and the gap becomes stark. A voyage that once carried about $250,000 in war risk cover now costs shipowners anywhere from $3 million to $10 million, Baker said. Multiply that across a fleet making repeated transits and the added cost eats directly into shipping margins, and eventually into the price Gulf exporters and importers pay to move goods.

Al Jazeera’s earlier reporting on the mechanics of war risk pricing noted that these premiums are typically reassessed weekly, sometimes daily, by a small group of London-based underwriters who track incident frequency in real time. Each new attack resets the risk model higher, which is why a single strike with minor physical damage can still ripple through freight rates for weeks.

Traffic through the chokepoint has thinned dramatically

The Strait of Hormuz normally carries 120 to 140 vessels a day, roughly half of them oil tankers moving about 20 million barrels of crude daily, a volume with no easy alternative route. During the worst periods of this year’s conflict, that traffic has collapsed to as few as two tankers a day, according to The National. Shipowners are choosing to wait offshore, reroute where possible, or simply pull vessels from the trade rather than absorb both the physical risk and the premium spike.

That kind of slowdown has knock-on effects for Gulf economies that depend on Hormuz to move both oil exports and imported goods. Fewer transits mean tighter vessel availability, which pushes freight rates up even for cargo unrelated to oil, a cost that eventually lands on UAE and wider GCC businesses reliant on seaborne trade.

Oil markets react, but not in a straight line

Oil prices rose again after Thursday’s attack and after Washington threatened Iran with what it called an “indefinite” blockade and further financial pressure, The National reported. Brent crude has traded choppily through August as hopes for a de-escalation deal have repeatedly risen and fallen, a pattern that has kept traders on edge rather than pricing in a single clear direction.

That volatility is itself a cost. Gulf energy exporters, including ADNOC, are pricing cargoes into a market where a single overnight incident can move benchmark prices, complicating contract negotiations and hedging decisions for buyers and sellers alike.

What it means for Gulf shipping and energy markets

For insurers, the current environment is a rare high margin opportunity dressed as a risk they would rather not underwrite at all. For shipowners, the choice is stark: pay the premium, reroute around Africa at a heavy time and fuel cost, or exit the trade lane altogether.

For UAE and GCC businesses that depend on Hormuz, the message from this latest attack is that Strait of Hormuz shipping insurance costs are not a temporary spike tied to one incident. They are now a structural cost of doing business in Gulf energy trade, and every fresh attack resets the baseline higher rather than allowing rates to fully normalize between incidents.

Sources: Al Jazeera, Las Vegas Review-Journal, Newsmax, The National, S&P Global, The National, Al Jazeera.

For more on how the Hormuz conflict is reshaping oil markets, read our report on ADNOC’s crude pricing overhaul.