INVESTIGATION: War premiums are skyrocketing, and insurers are deciding who gets to stay afloat

From single to triple, depending on the exact destination

Not all routes are affected equally by this surge. Rates for routes to Jizan and Al Shuqaiq have reached up to 3% of the vessel’s value, while those for Jeddah and Yanbu remain around 0.1%, according to Al Jazeera. The geography of risk is not uniform. It closely follows the areas where Houthi strikes and Iranian military tensions have been concentrated in recent weeks, almost port by port.

This granularity in rates reveals something that official statements never state so clearly: insurers have a more precise risk map than the one made public by governments. They know where to adjust rates even before governments officially confirm where threats are concentrated. Jizan and Al Shuqaiq are paying the price for their proximity to the Houthi front, figure by figure. Insurers’ risk maps are, at times, more valuable than those of military headquarters.

“Someone will cover you, but at a minimum of 5%”

A source in the war insurance sector, quoted by Reuters on July 8, 2026, amid an already tense situation, summed up the situation with unusual candor: “Someone will cover you, but probably at a minimum of 5%.” ” This statement, made three weeks before the current peak, already foreshadowed the trajectory confirmed by the July 23 figures. The market did not shut down. It set a price that few can afford.

Marcus Baker, global head of marine insurance at Marsh, quoted by Al Jazeera, confirms this dynamic from within the industry itself. What these converging accounts suggest is that the increase is not a temporary anomaly caused by panic, but a structural reassessment of risk that insurers intend to maintain as long as the military situation remains unstable and unresolved.

1,150 ships, $125 billion tied up

According to an Allianz estimate dated July 10, 2026, and cited by CNN, approximately 1,150 cargo ships, with a total value of about $125 billion, were stranded in the Persian Gulf. This figure, which predates the peak in insurance premiums on July 23 by two weeks, suggests that the situation has likely worsened since then. No more recent data is available to confirm whether this number has increased or remained stable in the meantime.

A stranded fleet of this magnitude is not merely a logistical slowdown. Every ship at anchor represents a shipment that doesn’t arrive, a commercial contract that deteriorates, and an opportunity cost that shipping companies will eventually pass on to consumer prices. A grounded ship costs the insurer nothing. It costs everything to the party waiting for the cargo.

What the Numbers Don’t Reveal About Shipowners Who Are Walking Away

None of the sources consulted precisely quantifies how many shipowners have chosen to permanently abandon certain routes rather than pay current premiums. This statistical silence is itself a data point: it indicates that the phenomenon is still too recent—or too fragmented among hundreds of independent companies—to produce a reliable aggregate figure for the period of July 20–24, 2026.

What can be said based on the available data is that the combination of freight rates that have quadrupled and surcharges that have multiplied creates a break-even point that many cargo shipments can no longer meet. Certain goods are simply no longer worth the risk of the crossing, and it is this cold economic logic—more than fear itself—that is gradually draining the strait of some of its usual traffic.

A pause in the strikes that did little to reassure insurers

On July 27, 2026, according to Euronews, the United States and Iran observed a third consecutive night without strikes—following thirteen nights of U.S. strikes—to give diplomacy a chance. This pause could, in theory, have brought premiums down. It did not, at least not according to the figures available as of July 23–24. Insurers do not react to a lull lasting just a few days.

The launch of Iranian ballistic missiles against a U.S. base in Jordan on July 28, 2026, at 5:45 p.m. ET, according to a CENTCOM statement reported by Townhall, illustrates why this caution is justified. All the missiles were reportedly intercepted, according to CENTCOM, but the incident confirms that no military lull equates, for a policyholder, to a guarantee of stability. Diplomacy may suspend strikes. It does not suspend insurable risk.

What Recent History Teaches Us About the Slow Decline in Premiums

The general trend observed in this type of market suggests that war premiums always fall more slowly than they rise. No source in this report provides a precise timeline for when conditions are expected to normalize in the Strait of Hormuz or the Red Sea. The dates for a return to normal rates are not specified in the public documents consulted for this investigation.

This disconnect between military developments—which unfold by the hour—and the insurance market—which evolves over weeks or months—creates a window during which shipowners continue to pay crisis premiums even as the situation on the ground improves. A ceasefire is not negotiated with an actuary; it is proven, month after month, through the absence of incidents.

Before the blockade, a premium of 0.3%; after, more than 1%

Insurance Journal provides a detailed timeline for the southern Red Sea: premiums stood at 0.3% before the announcement of the Houthi blockade, rose to 0.75% on the Tuesday before July 23, and then exceeded 1% at the time of publication. This three-stage increase documents, almost in real time, how an insurance market reacts to a gradual escalation rather than a single, isolated shock.

The Houthis’ role in this escalation is central but not isolated. A Saudi tanker was reportedly targeted by a Houthi missile, according to a claim reported by Al Jazeera on July 28, 2026—an event that fits into this pattern of ongoing tension in the Red Sea. Every claim of this kind—whether confirmed or not in the days that follow—immediately fuels the perception of risk among the affected policyholders. A single claim, true or false, is enough to drive up a price. Proof will come later—if it comes at all.

One region, two overlapping risk dynamics

The Strait of Hormuz and the Red Sea do not follow the same risk logic, even though their premiums are rising in parallel. Hormuz is directly linked to the U.S.-Iran confrontation and its military repercussions. The Red Sea is more closely tied to the Houthi campaign, which has been ongoing for longer but is intensifying in tandem with the broader Iranian crisis. The two areas feed into each other in the minds of insurers.

This perceived convergence of risk partly explains why even routes relatively far from the heart of the conflict, such as Jeddah or Yanbu, are not entirely spared from the market’s general nervousness, even though their premiums remain comparatively low—around 0.1% for now.

The end consumer, far from the Gulf

A rise in transportation costs from $18.91 to $77.96 per metric ton does not stop at the port of departure. It is passed on—with a lag of several weeks to several months—to the final price of any product transported via this route: fuel, raw materials, and manufactured goods. Consumers thousands of kilometers from Hormuz end up paying a fraction of this premium, without ever seeing the insurance bill that generated it.

None of the sources consulted for this investigation provide a precise numerical estimate of this impact on global consumer prices for the period of July 20–24, 2026. This causal link, while economically logical, remains here a reasonable inference rather than a quantified fact in the documentation available for this specific investigation.

Smaller shipping companies are the first to exit the market

It is the least capitalized shipping companies that feel the impact of a multiplied premium first. A large company can temporarily absorb a cost increase by spreading it across a broad portfolio of routes. An independent shipowner, operating one or two vessels on specific Gulf routes, does not have this flexibility. The crisis is not driving everyone out of the Strait at the same pace. It is driving out first those who lack a financial cushion.

This silent culling—invisible in overall traffic statistics—is nevertheless shaping the future composition of regional maritime transport: the players that survive this period will disproportionately be the largest, the best-insured, and those closest to governments capable of offering them some form of protection or financial guarantee.

Trump Proposes Paying for Damages with Seized Iranian Funds

On July 24, 2026, Donald Trump announced on Truth Social—according to a message relayed by the Syrian news agency SANA—that “all damages caused to ships, cargo, or anything related thereto will be paid with Iranian funds held and controlled by the United States.” The amount in question is at least $100 billion in frozen Iranian assets. If implemented, this proposal would fundamentally change the risk assessment for the shipowners involved.

However, at this stage, it remains a political statement rather than an operational financial mechanism. No independent judicial or financial authority has validated the legal feasibility of such a plan at the time of writing. An insurer does not set its premiums based on a presidential promise that has not been translated into a binding and verifiable legal instrument.

The Iranian threat that closes this door before it even opens

Colonel Ebrahim Zolfaqari, an Iranian military spokesperson, warned via the IRNA news agency that Iran would bar any company or country that accepts compensation funded by these frozen assets from passing through the Strait of Hormuz. This threat, if carried out, would turn any U.S. compensation into an additional commercial risk rather than providing real relief for the targeted shipowners.

This dynamic illustrates the complexity of a market where political decisions, rather than mitigating insurable risk, can instead create a new layer of risk. Insurers, who already have to contend with military uncertainty, must now also assess the diplomatic risk associated with accepting or rejecting future, unsecured U.S. compensation. A promised $100 billion is worth nothing in the face of a threat of closure that can be carried out with a single press release.

S&P Global vs. Insurance Journal: Two Perspectives on the Same Market

The discrepancy between S&P Global’s estimate (7.5–10% for the Strait of Hormuz) and that of Insurance Journal (more than 1% for the southern Red Sea) cannot be explained solely by differences in the routes considered. It also reflects distinct valuation methodologies, different client portfolios, and likely slightly offset data collection dates within the same week of July 20–24, 2026.

Treating these two figures as interchangeable would be a methodological error. Each estimate must be precisely attributed to its source and specific route; otherwise, the reader is presented with a falsely homogeneous picture of a market that, in reality, operates through distinct pockets of risk that change from one day to the next.

Oil Tanker Struck by a Mine: A Report to Be Treated with the Utmost Caution

An unconfirmed, single-source report mentions an oil tanker that struck a naval mine in the region, with no confirmation from CENTCOM at this stage according to the documents reviewed. No official agency had verified this incident at the time of writing this investigation. This type of information should be flagged as unconfirmed rather than prematurely dismissed or validated by anyone following this case.

If such an incident were subsequently confirmed, it would have an immediate and disproportionate effect on insurance premiums, far beyond what the gradual trends observed so far suggest. It is precisely this type of isolated but confirmed event that could tip an already strained market toward a near-total closure of certain shipping routes. An unconfirmed mine already causes more damage to a premium schedule than a confirmed mine does to a ship’s hull.

A 90% year-over-year drop in traffic

According to Lloyd’s List Intelligence, non-Iranian transits through the Strait of Hormuz fell to 25 for the week of July 13–19, 2026, down from 108 the previous week. Inbound traffic fell to 8 vessels from 43 previously. Total traffic plummeted by approximately 90% year-over-year. These figures show that the decline in traffic preceded—or at least closely coincided with—the surge in freight rates observed a few days later.

VLCC (Very Large Crude Carrier) movements fell to 9, down from the usual 35. This category of vessels, the most profitable for large-scale oil transport, is also the most financially exposed in the event of an incident, which explains its disproportionate decline relative to the region’s overall maritime traffic.

What Tehran’s Claim That the Strait Is “Closed” Really Means

Tehran claims that the Strait of Hormuz “remains closed,” a claim that contrasts with data from Lloyd’s List, which shows reduced but not zero traffic. This nuance must be kept in mind when assessing the situation: this is not a total and verified blockade, but a severe contraction that produces an economic impact comparable to a partial closure for the majority of non-Iranian shipowners. A strait operating at 10% of its normal traffic volume is not closed on paper. It is, however, in the bottom line of every shipowner who has opted out.

According to Reuters on July 28, 2026, Oman proposed a regional mechanism for the Strait of Hormuz modeled after the Strait of Malacca—an approach aimed specifically at restoring a degree of operational confidence along this route. None of the sources consulted specify what stage of negotiation this proposal was at as of July 28, nor whether it is already having a measurable effect on current premiums.

A Transit Point, a Disproportionate Share of the World’s Oil

In the geography of global energy trade, the Strait of Hormuz remains a bottleneck without any real equivalent: a very significant share of oil transported by sea has historically passed through this strait. A 90% drop in non-Iranian traffic—even if temporary—is therefore never a purely regional incident. Every barrel that no longer passes through Hormuz must find an alternative route—at a higher cost—or temporarily disappear from the global hydrocarbon market.

In fact, according to Reuters, the price of Brent crude fell by 5.2% to $83.75 per barrel on July 28, 2026—a decline attributed to hopes for a de-escalation of the conflict rather than to a confirmed improvement in actual traffic through the strait itself. This price drop and the continued rise in insurance premiums seem, on the surface, to tell two contradictory stories for the same week in July.

Two markets at odds over the trajectory

This divergence between the oil market—which reacts quickly and sometimes speculatively to diplomatic news—and the insurance market—which reacts slowly and is based on a cumulative assessment of actual risk—is one of the most compelling lessons from this period. Traders are betting on a de-escalation. Insurers, on the other hand, continue to count the missiles, drones, and ships grounded in port.

This divergence is not trivial. It means that the drop in oil prices should not, on its own, be interpreted as a reliable signal that the crisis in regional maritime trade is over. The price per barrel reflects the hope of the morning. The insurance premium reflects the memory of the last three months.

Regional Diplomacy Is Making Progress, But Slowly

Oman’s proposal for a regional mechanism for the Strait of Hormuz, similar to that for the Strait of Malacca, as reported by Reuters on July 28, 2026, represents one of the few structural initiatives aimed at breaking free from this cycle of perpetual crisis. Such a mechanism, if implemented, would aim to separate the management of maritime traffic from direct military tensions between the warring parties. The sources consulted do not provide a specific timeline for its adoption.

At the same time, a bipartisan bill in the U.S. Senate calling for strengthened sanctions against Russia—honoring the memory of Senator Lindsey Graham—explicitly mentions the Iranian regime’s capacity to support destabilizing activities, linking the Russian and Iranian issues within the same framework of Western pressure. This legislative link does not, in the short term, affect current maritime insurance premiums.

What Is Still Missing for a Sustainable Decline in Premiums

None of the sources consulted describe a concrete mechanism by which current insurance premiums would fall rapidly, even in the event of a prolonged military lull in the region. Insurers have historically required observation periods ranging from several weeks to several months without incident before adjusting their rate schedules downward. Three nights without an attack—even if consecutive—are clearly not enough.

This time lag between military developments and premium adjustments will remain, in the weeks following July 28, 2026, the most reliable indicator for assessing whether the region is truly heading toward lasting stabilization or merely experiencing a tactical lull before a new escalation of hostilities. Three quiet nights do not result in any premium refunds. It will take much more than that.

Perishable Goods: The First Silent Victims

Behind the headlines focused on oil tankers and VLCCs, another category of cargo is suffering in silence: shipments of perishable goods, time-sensitive industrial parts, and everyday consumer goods that travel along the same routes, which are now subject to surcharges. None of the sources consulted provide separate figures for these categories of goods, but the pricing logic applies equally to all types of cargo traveling along the same high-risk maritime corridors.

A low-margin shipment—unlike a barrel of oil, whose global price can absorb part of the additional cost—often lacks the financial capacity to absorb a fourfold increase in fees. It is precisely these shipments that disappear first from transit records, without ever being the subject of a dedicated report in the specialized publications consulted for this investigation.

An imbalance that favors major industrial powers

The economies best able to absorb this tariff shock are those that already have alternative routes, strategic reserves, or sufficient domestic production capacity to reduce their immediate dependence on transit through the Strait of Hormuz. More fragile economies, dependent on regular imports transiting via this single route, bear a disproportionate share of the economic shock generated by this surge in premiums.

This structural imbalance—documented indirectly by the drop in total traffic rather than by a dedicated impact study—warrants close monitoring in the weeks following July 28, 2026, as the effects of this crisis spread beyond the oil sector alone to encompass all regional and global supply chains. The headlines focus on oil tankers. Ordinary cargoes, meanwhile, disappear from the records without a word.

A threshold already nearing a breaking point

If the ongoing negotiations fail and attacks resume at the same pace observed before the July 27 lull, insurers already have—according to the trends documented in this survey—a rate schedule ready to be adjusted even higher. Nothing in the sources consulted indicates that a technical ceiling has been reached for war premiums on this route. In just a few weeks, the market has demonstrated its ability to absorb a fourfold increase in shipping costs without coming to a complete standstill.

This almost alarming elasticity suggests that the true breaking point—the point at which no shipowner would agree to sail at any price—had not yet been reached as of July 28, 2026. No one, based on the documents reviewed, can predict with certainty where this point of no return lies, nor how much longer the current system can hold out before shifting toward a more widespread halt in commercial traffic.

The opposite scenario: a de-escalation that goes unnamed

Conversely, if the pause in strikes were to continue without major incident for several more weeks, insurers would likely begin—in accordance with the market logic typical of this type of crisis—to lower their rate schedules. Premiums do not drop based on a promise. They drop based on a prolonged and verified silence, day after day.

This scenario—plausible but not confirmed by the data available as of July 28, 2026—would depend entirely on the ability of both sides, the U.S. and Iran, to maintain a tacit truce long enough to convince a structurally wary sector that the risk has genuinely diminished, rather than merely been temporarily paused.

Twenty-one million dollars to insure a single oil tanker. Ninety percent of non-Iranian traffic has disappeared from the most strategic strait in global oil trade. One thousand one hundred fifty ships grounded, one hundred twenty-five billion dollars tied up in port. These figures, taken from reports dated July 20–28, 2026, do not describe an abstract crisis: they describe a market that has already rendered its verdict, long before diplomats have delivered theirs.

Nothing in the sources consulted allows us to assert that this surge in premiums will reverse in the coming weeks, nor that it will continue to climb indefinitely. What can be said, with the caution that this type of market demands, is that marine insurance has, in effect, become an informal instrument of foreign policy: it determines, day after day, figure after figure, who still has the means to cross the strait. The war is being negotiated at the White House and in Tehran. The price of the war, however, is set by underwriters in London and Zurich.

By Maxime Marquette, columnist