It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Friday, March 06, 2026
Industry Weighs Risk to Seafarers, Balance Sheets in Hormuz Transits
A sole disabled boxship (green dot off of Kumzar) shows the risks of a Hormuz transit in current conditions (MarineTraffic)
As the security situation in the Gulf region remains dangerous for vessel transits, industry voices differ on the question of whether vessels should stay out of the Strait of Hormuz for reasons of seafarer safety.
Transits of the strait are under direct threat from Iran, which has demonstrated a capability to hit vessels that attempt to make the run. Once past the strait and inside the Gulf, all inbound merchant ships remain within targeting distance and vulnerable to Iranian attack, from Kuwait to Dubai.
Blue-chip operators like Maersk and CMA CGM have cast their votes in favor of prudence and suspended calls in the Gulf region, thereby eliminating war risk for their seagoing personnel (except those already west of Hormuz, estimated to number about 20,000 personnel). On the other end of the spectrum, a handful of owners are asking their captains to make transits in and out. To be sure, seafarers have agency of their own and can decide whether to join such a voyage. Under IBF rules, crewmembers have a right to be informed of combat-zone hazards and a right to request repatriation - though it is a request that comes with its own risks.
So far, industry bodies have advised owners to weigh and manage war risks, not to avoid them - consistent with the varying opinions and business models of international shipowners. For VLCC owners, Mideast transits are now more lucrative than at any point in industry history. If the risk to crew is acceptable, a single voyage could pay for a third of the price of the ship.
"Seafarers continue to operate in a complex and uncertain environment, and their safety and wellbeing must remain a priority," said Intertanko and OCIMF in a joint statement Thursday. "Operational decisions should be based on thorough, company-led due diligence and comprehensive risk assessments . . . [and] the human element should be considered in decision-making."
The International Chamber of Shipping, which represents vessels of all classes, expressed concern and emphasized the obligation of nation-states to ensure safety.
"By no fault of their own, [seafarers'] lives are now tragically at risk. We call on all states to take the fundamental steps to ensure their safety," ICS' leadership said in a statement. "Freedom of navigation is crucial to global trade. All states must ensure the safe passage of merchant vessels, prioritizing the safety and welfare of the crew on board."
Some observers have called for private parties to take their own actions to ensure safety for crew.
"Stop trying to pass the Strait of Hormuz!" implored EOS Risk Group's Martin Kelly in a message Wednesday. "There have been at least 10 attacks against shipping in 72 hours. At least one person dead, and at least one ship abandoned. . . . Please, defer transit."
In Piraeus, the epicenter of the crude tanker industry, unionized seafarers have gone a step further. Protesters at the shipowners' union building near the harbor have spraypainted the sidewalk with the phrase "no sacrifice for profits and wars," according to Reuters. Their demand is nothing less than the swift and safe return of all seafaring personnel currently in the region - a demand which would require cessation of trading.
"We demand that all of our colleagues, currently in the dangerous Gulf area, the Gulf of Oman and the Red Sea, are evacuated and safely repatriated," said Angelos Galanopoulos, head of engineering crewmembers' union Stephenson.
This has been achieved by dint of a relatively small number of attacks on all classes of merchant shipping, with sufficient risk to life to call off further attempted transits for the time being, reinforced by an increase in premium rates to levels which in any case make transits in and out of the Gulf for the time being uneconomic.
Global trade flows can absorb a closure of one of the world’s busiest shipping channels for a short period of time. But pressure will be rising all the time, both to get oil and gas out of the Gulf and basic essentials into Gulf countries which are all highly import-dependent. The situation is exacerbated because while effectively a sea blockade is in place, there are also major restrictions on the air transport of goods.
So what’s the plan to get the Straits reopened?
Firstly, what is the threat which needs to be suppressed? The nature of the threat is much changed from the days during the Iran-Iraq war 50 years ago when military operations managed to keep the Straits open. The situation is much more akin to the recent Houthi Red Sea blockade – where Iranians IRGC advisers played a role in designing the scheme which the Houthis used to restrict, but not entirely eliminate traffic flows, using a mixture of mines, anti-ship cruise missiles, drones, speedboats armed with short-range weapons, and direct boardings from skiffs and helicopters.
That range of threats is analogous to what merchant mariners now face in the Straits, albeit with two differences: the Straits are longer and narrower, permitting use of a wider range of weapons and reducing the difficulties for Iran in identifying targets. The United States has already neutralized the other differentiator: use of frigates and corvettes, which the Houthis never had, and which the Iranians no longer have either.
US and Israeli attacks have by all accounts been very successful in detecting and destroying both permanent and mobile missile and drone launchers. But just as the entire Houthi armory was difficult to account for, and the Houthis retained the ability to launch drones and missiles even at the end of the campaign against them, it is likely that sufficient capability has been hidden away and dispersed to pose a continuing threat even if the bulk of the force has been destroyed. To maintain a credible threat, which could be as low as the ability to launch one or two attacks a day on shipping in the Straits, the Iranians only need to mask a small number of launchers. To entirely suppress the threat would be extremely difficult – but American planners know this, and could have a plan on how to achieve this.
A sanguine assessment however is that the Iranians will manage to retain for some time an ability to mount one-off attacks; this is certainly suggested by their willingness even after five days of war to extend their range of attacks, for example targets in Azerbaijan. To counter a persistent threat, there will be a need for active optical and electronic surveillance, with an immediate response capability, covering potential mobile launcher firing points along at least 250 miles of Iranian coastline and its hinterland, from Abu Musa in the West to Jask in the East.
A minesweeping capability, and the means to keep a swept channel clear, is also necessary. Shipping channels also have to be kept completely clear of small craft and fishing boats, which the Iranians could use both for cueing long-range attacks and for mounting close-quarter physical attacks. Lastly, one needs naval vessels to provide close-in electronic counter-measures, detection and intercept protection for merchant vessels making the transit.
It is difficult to envisage such a screen being maintained permanently, allowing use of the Traffic Separation Scheme channels as it operates in peacetime. It might be possible to provide largely effective protection on a convoy basis, and no doubt marine insurance cover could be put in place.
But critically, this could not be done unless merchant vessels acknowledged there would be some residual risk. Mariners took that sort of mortal risk in previous wars when the Merchant Navy tended to be manned by nationals of the nations doing the fighting. But with international crews on ships owned in one jurisdiction and flagged in another, this is not really an ask which owners and managers can any longer put to crews. If the price was right, some might sign up, but not for reasons of patriotism. 355
However, even a convoying arrangement embracing some acknowledged risk could not float unless there were sufficient naval vessels available to provide the convoy escorts, many more vessels than could be furnished by the United States alone. Keeping the Straits of Hormuz open will not feature highly on Israel’s strategic plan, focused narrowly as it always does on national survival and security. As yet, there are no signs of countries with navies of sufficient sophistication being ready to volunteer for the task. On the contrary, with the decommissioned HMS Lancaster symbolically tied up in Bahrain, some nations are actively walking away from assuming any responsibility for the safety and protection of merchant shipping on their registers or serving their economic interests.
Measuring the disparity between the threat and the capability response needed, it is reasonable to conclude that a military solution to opening up the Straits of Hormuz is not yet feasible. Given the confidence of U.S. CENTCOM commander Admiral Brad Cooper after five days of operations, that is likely to change. Until then, the only potential solution to the current closure of the Straits lies within the political and diplomatic realm, a possible product of a cessation of hostilities or ceasefire negotiations - but not one being countenanced by either side or even as yet being suggested by the Omanis, the region's perennial diplomatic intermediaries and peacemakers.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.
Lloyd's Stands Ready to Work With U.S. on Insurance for Hormuz Transits
Iranian attack boats in an exercise in more peaceful times (Tasnim / IRGC)
War risk insurance remains available for shipping in the Strait of Hormuz and Arabian Gulf, according to Lloyd's of London, despite the decision of some underwriters and reinsurers to back out of the trade. The market is willing to work with the White House on a joint public-private venture to provide cover for shipping in the region, in hopes of kick-starting the energy trade through high-risk waters, Lloyd's Market Association CEO Sheila Cameron told the WSJ.
In a message Tuesday, Trump said that he would order the U.S. Development Finance Corporation (DFC) to provide "political risk insurance and guarantees" for shipping of all nations through the Gulf, at a "very reasonable price." Insurance industry insiders say that this plan would require exceptional amounts of capital, beyond the current resources of the DFC. Private war risk insurance for the Gulf is already available on the commercial market, brokers say, but at exceptionally high price levels - reflecting the high risk of an attack on vessels that defy Iran's closure of the Strait.
"The granting of war cover for the Persian Gulf and Red Sea is and will remain available under specific agreement on a single voyage basis as long as navigation is authorized by governments and flag states. In the current fast-paced situation, insurers will regularly re-examine their ability and willingness to that provide cover," the International Union of Marine Insurers said in a statement Friday.
VLCC spot rates are high enough to make such terms worthwhile for tanker owners, who stand to earn mid-six-figure sums per day for voyages from the Gulf region. One VLCC was reported on subjects at $700,000 per day on Friday, by far the highest rate ever recorded - beating a previous record set earlier this week.
But the insurance part of the equation can only solve the security of the owner's balance sheet; the physical security of the route is a matter decided by nation-states, and is still very much in question.
"As long as the security situation remains volatile, many shipowners may remain reluctant to transit the strait even if [U.S.] government-backed coverage becomes available," credit rating agency Morningstar told S&P.
Meanwhile, Iran's cargoes continue to sail. The LPG carrier Danuta I - sanctioned by the U.S. Treasury - transited the Strait of Hormuz fully laden with Iranian propane or butane on Friday, AIS tracking shows.
Insurance and Naval Escorts May Not be Enough to Reboot Gulf Shipping
The small tanker Skylight burns after an Iranian strike (social media)
War risk at the Strait of Hormuz continues to deter shipowners from venturing near to Iran, and AIS-active traffic remains 90 percent below normal levels, according to MarineTraffic. Despite the hazards, a handful of owners are willing to make the run and join the 3,200-strong fleet inside of the high-risk zone of the Arabian Gulf.
"Stop trying to pass the Strait of Hormuz," security consultant Martin Kelly of EOS Risk Group implored shipowners. "There [have] been at least 10 attacks against shipping in 72 hours. At least one person dead, and at least one ship abandoned. . . . Please, defer transit."
Iran's strikes on shipping multiplied over the course of Tuesday and Wednesday, according to UKMTO. Six incidents were reported on March 3-4: a hit on the bulker Gold Oak off Fujairah, resulting in hull damage; a hit on the tanker Libra Trader off Fujairah, resulting in minor damage; a near-miss spotted by the container ship MSC Grace off Dubai; a close-in near miss on an unnamed vessel in the Gulf of Oman, nearly 140 nm offshore; a serious hit aboard the boxship Safeen Prestige in the Strait of Hormuz, resulting in a fire in the engine room and a decision to abandon ship; and (most recently) an apparent small-boat commando attack on a tanker 30 nm south of Kuwait, resulting in a blast and an oil spill.
A U.S. pledge to provide insurance for shipping in the region may help from a business standpoint, if it can be actualized, but improved physical security is likely a requirement for sustained commerce at scale. "Insurance may incentivize a few to start transiting but the Iranians will likely attack and then traffic will again cease transit," Odin head analyst Alpman Ilker told Argus Media.
Physical security have to await the resolution of the conflict. Odds of a naval escort mission appears limited given the intensity of ongoing combat in the Gulf region and the availability of resources. Most of the attacks to date have occurred far outside the Strait of Hormuz, at locations from Kuwait to Salalah. Any U.S. Navy assets tasked to escort duty would have to spend days in range of Iranian missiles and drones, requiring the crews to defend themselves as well as their convoys.
"The Red Sea precedent is instructive: 15 months of 'Operation Prosperity Guardian' escorts failed to restore commercial traffic despite 400 drones/missiles downed," commented analysts with SSY Global in a new research note. "[At Hormuz] physical geography favors the attacker. TSS lanes are two nm wide each direction; vessels transit at 10–12 knots and must turn at the narrowest point adjacent to Iranian islands. A destroyer can intercept missiles but cannot simultaneously sweep mines, counter drone-boat swarms from multiple bearings, and manage GPS disruption."
The shadow fleet tankers that serve Iran have no such security concerns, at least based on satellite imagery. The loading berths at Kharg Island are still running at full rate, according to TankerTrackers.com.
Hormuz Shutdown Could Also Affect Agriculture, Petchem and Mining Sectors
Much attention has been paid to the effects of the Strait of Hormuz shutdown on the oil and LNG markets, but there are half a dozen other commodities that will be affected in the weeks to come if a security solution isn't reached soon. The GCC states produce half of the world's traded sulfur, a large share of its phosphate, and much of its nitrogen fertilizers - all needed for industrial agriculture. They also supply methanol, ethane, propane, naphtha and other basic ingredients to chemical plants across East Asia.
Agricultural fertilizer may be the most prominent market affected, as the natural gas-rich region is a leading producer and exporter. The broader MENA region produces about half of the world's urea, critical for row crops. Gas giant QatarEnergy alone accounts for 14 percent of the global supply, and Iran accounts for another 10 percent.
Saudi Arabia is also a major exporter of elemental phosphate. Crop production for staples like wheat and corn is heavily dependent on these chemical fertilizer inputs, and planting season is coming in the northern hemisphere. Fertilizer markets in the U.S. are already reacting with price increases: urea has jumped by 70 percent in three months.
"Nitrogen/phosphate markets, the timing of the Strait reopening is everything. If the Strait opens quickly, production can continue and flows return," said fertilizer wholesale executive Josh Linville in commentary posted Wednesday. "However, the longer it draws out, the more likely production will be to stop for lack [of storage] space."
With the shutdown of the strait, exports of chemical feedstocks from the Gulf have also ceased. Chemical plants in some East Asian nations are already curtailing production because of the unpredictability of future feedstock deliveries. Yeochun NCC, a South Korean petchem plant operator, told its customers that it had declared force majeure on Wednesday because of a naphtha shortage, forcing it to reduce output at its plants to "minimum capacity" effective immediately. It is expecting long delays in naphtha shipments that were scheduled to arrive in March. Indonesian manufacturer Chandra Asri has announced similar production-slowdown steps.
The Gulf also accounts for half of the world's seaborne sulfur trade. A byproduct of petroleum processing in the region, it is used for making sulfuric acid - key to extracting phosphate for fertilizer and for refining copper, cobalt, nickel, lithium and gold ores. Prices have already been high for sulfur and are expected to rise, especially in African markets that are more dependent on Gulf suppliers.
Iran Threatens to Set Ships "On Fire" in Strait of Hormuz
No tanker traffic broadcasting AIS inside the strait, 0030 hours local time, March 3 (MarineTraffic)
Iran's senior leadership has announced a full shutdown of the Strait of Hormuz and threatened to "set on fire" any vessels passing the blockade. Multiple leading P&I clubs have announced that they are suspending war risk insurance for transits of the strait effectively making the risk exposure too high for tanker owners to bear, and energy shipping traffic through the strategic waterway has ground to a near-halt. As of Monday night, maritime tracking platforms showed virtually no (disclosed) tanker transits through the TSS.
According to the FT, broking sources say that war risk insurers are pulling previously-arranged coverage for future transits of the Strait, transferring the full risk of an upcoming transit to the shipowner for the short voyage. The decision suggests that P&I clubs and reinsurers see so much uncertainty in Iranian attacks that they can't calculate an appropriate rate - even an exceptionally high rate, like the one percent of hull value charged for Ukraine-bound vessels during the peak of the Russian blockade.
"It is already evident that reinsurers’ appetite for war risk exposure is tightening, and in practical terms, it will result in reinsurers withdrawing capacity at short notice," said leading P&I club Skuld in a statement. "Against this backdrop, the association has therefore decided to issue the assureds with a notice of cancellation of the War Risk Cover."
The withdrawal of war risk coverage will take effect on March 5, 72 hours after notice was issued. It extends throughout the Arabian Gulf and the Gulf of Oman. Gard, NorthStandard, London P&I and the American Club have followed suit as well.
Basic P&I, FD&D and Excess Wark Risk are unaffected - but without baseline war risk cover, owners are unlikely to venture into an active combat zone.
Gard said that it was still working on the terms of a buy-back option for shipowners to reinstate their war risk coverage at an extra cost. For now, Gard is not offering reinstatement until after it has ironed out the terms it would like to receive.
Basic P&I, FD&D and Excess Wark Risk are unaffected - but without baseline war risk cover, owners are unlikely to venture into an active combat zone.
In another sign of the added risk and cost for owners who wish to operate in the broader region, the ITF and the Joint Negotiating Group (JNG) have designated Hormuz, the Arabian Gulf and most of the Gulf of Oman as a formal high risk area, triggering extra pay and certain extra rights for seafarers in the region. Owners are also advised to increase security preparedness to ISPS Level 3.
The list of crewmember benefits for this new designated warlike operations area (IBF High Risk Area) includes:
- a bonus equal to the basic wage for the duration of time in the zone
- double compensation for death and disability;
- and a right to refuse sailing, with repatriation at company’s expense plus two months' of wages.
The physical and financial risks for owners have added up to a suspension of traffic - for now. According to maritime data consultancy Windward, there were zero active tanker transits in the strait as of late Monday. "The Strait is technically open, but commercial tanker passage has effectively ceased," Windward said in a statement.
Maritime analysts have been quick to note that Iran is heavily dependent upon oil sales to China for revenue, and will not be able to afford to fully close the strait to its own tanker traffic - nor can it risk angering its only real customer. Chinese refiners also buy oil from Iraq, Kuwait and Saudi Arabia, and a shutdown of any duration for the GCC nations' tanker traffic would attract China's attention.
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