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Marine insurers cancel war-risk cover; tanker costs will rise as Iran conflict intensifies

Marine insurers have canceled war risk coverage on vessels, and oil shipping rates will'surge further' after the Iran conflict has left at least three tankers damaged. A seafarer was killed, and 150 ships are stranded in the Strait of Hormuz.

Iran responded to U.S.-Israeli strikes which began on Saturday by retaliatory actions that have increased the risks for commercial shipping over the last 24 hours.

Shipping data revealed on Sunday that at least 150 vessels, including oil tankers and LNG carriers, had dropped anchor in the Strait of Hormuz.

Ships carrying oil from Saudi Arabia, United Arab Emirates (UAE), Iraq, Iran and Kuwait, which is equal to one-fifth the global demand, sail through the Strait, along with tankers transporting diesel, jetfuel, gasoline, and other products.

On Monday, the disruption caused a 9% increase in oil prices worldwide.

INSURERS CANCEL RISK COVERAGE FOR WAR

According to an announcement dated March 1, on their websites, companies such as Gard, Skuld and NorthStandard would be cancelling their memberships starting March 5.

According to the notices, war?risk coverage will not be available in Iranian waters as well as Gulf and adjacent water.

Skuld?added to its notice that?it was working on a?buy-back option for reinstatement of cover.

The MS&AD Insurance Group of Japan announced that it had suspended the underwriting of several insurance policies covering risks of war in the water around Iran, Israel and neighboring countries.

OIL SHIPPING CHARGES TO SOAR FURTHER

Analysts and market sources said that the cost of shipping oil to Asia from the Middle East - which is already at a six-year-high - will continue to increase as the Iran conflict continues to deter shipowners.

TD3C, or Spot?shipping Rates from the Middle East towards Asia Shipbrokers expect to see gains continue. The benchmark has almost tripled in value since the beginning of 2026.

On Monday, brokers estimated that the rate to hire a very large crude ship on the Middle East-China route was 4% higher on average than it was on Friday. The spot rate is near W225 in the Worldscale Industry measure or at least $12 Million.

A RISE IN EXPONENTIAL VALUE

Emril Jamil is a senior LSEG Analyst. He said that "TD3C prices were increasing exponentially even before the attacks. They will continue to rise as countries'scramble' to meet their needs for energy.

A shipbroker stated that there is still a lot of uncertainty about the final rate for Monday, but that all Middle East loading routes should remain stable. The shipbroker declined to be named because they were not authorized to speak to the media.

A source with a shipping firm said that the market would need more ships to transport crude oil from the U.S.A. and West Africa over longer routes. This could help support the freight along those routes.

(source: Reuters)