As shipping insurance rates rise, such as Hormuz, Bab al-Mandeb closed | US-Israel War on Iran News

Marine insurance rates have skyrocketed amid shipwrecks in the Strait of Hormuz and are also rising for ships passing through the Bab al-Mandeb, with all waterways – vital to the global economy – now battlegrounds.

The Houthi group allied with Yemen in Yemen has announced the closure of Saudi Arabian ports and ships in the Bab al-Mandeb Strait, which connects the Red Sea to the Indian Ocean, earlier this week.

This comes on top of the disturbance that occurs in the Strait of Hormuz due to US-Israel War on Iran. Tehran has insisted that ships negotiate before attempting to pass, while the US has suspended its blockade of ships bound for Iran.

Look at shipwrecks caused by war, and how they are raising insurance rates.

What is happening in the Strait of Hormuz?

Iran’s Islamic Revolutionary Guard Corps (IRGC) said on Thursday that an explosion had set off a ship in the Strait of Hormuz after it tried to pass through the southern channel from the coast of Oman.

In a statement published by Iranian media, it is said that two other ships quickly turned away from the explosion.

The IRGC said the three ships were traveling under the direction of the US and “intended to pass through a route laid by a mine south of the Strait of Hormuz”.

“The powerful IRGC Navy emphasizes that the Strait of Hormuz is in our hands and that as long as America’s evil in the region continues, it is closed and no oil tanker will enter or leave (the route),” it warned.

The Strait of Hormuz has become a major bone of contention between the US and Iran

Before the war, about 120-140 ships passed through the river every day, about half of which were oil tankers that moved about 20 million barrels a day. At the height of the war in Iran, traffic through the waterway dropped to two tankers a day.

Ten ships crossed the route on Tuesday, down from 16 on Monday, according to data from S&P Global.

How have insurance prices changed in Hormuz?

Marine insurance premiums for ships plying the river have soared, with insurance companies reluctant to insure the voyages because they are prone to attacks, according to a report published by S&P Global on Wednesday.

The report added that the cost of insurance against war in the waterway used to make up between 1 percent and 3 percent of the cost of the ship. This has now risen between 7.5 and 10 percent of the stock price.

The report said that on Wednesday, the market price was $77.96 per metric tonne of crude oil to ship 270,000 tonnes from the Gulf to China, and this price has remained stable since Monday. Before Monday, the price was $73.80 per metric tonne.

The current rate is four times the five-year average of $18.91 per metric tonne. The rate peaked in March at around $140 per metric tonne, when the dispute was at its height. The lowest since March was over $60 per metric tonne in early June.

At $77.96 per metric tonne, insuring a 270,000-metric-tonne tank would cost about $21m.

The US and Iran signed a memorandum of understanding (MoU) on June 17 to extend their suspension and continue peace talks. This led to a 60-day negotiation period during which the main fighting subsided until the second week of July, when it resumed.

What is happening in Bab al-Mandeb?

Bab al-Mandeb Strait it is located between Yemen in the northeast and Djibouti and Eritrea in the Horn of Africa in the southwest.

It connects the Red Sea with the Indian Ocean through the Gulf of Aden. It is 29km (18 miles) wide at its narrowest point, limiting traffic to two inbound and outbound shipping lanes and is well controlled by the Iran-backed Houthis.

On Monday, the Houthis announced a naval offensive against Saudi Arabia. The group from Yemen is a central part of Iran’s “axis of resistance”.

The Houthis said the main operation against two Saudi oil tanks in the Red Sea, called Encelia and Layla, Layla. The Saudi SPA news agency confirmed that Encelia had been hit.

The Houthis said they targeted the two tanks with surface-to-air missiles and drones, which unleashed massive fireballs and destruction.

The Houthis planned the attack as part of a campaign against Saudi Arabia. They call it “surrounding”. He added that it has been almost 12 years since Saudi Arabia surrounded the Yemeni people, and now it is time for Yemen and the Houthis to respond in kind. Riyadh has denied the Houthis’ claims that they have encircled Yemen.

The S&P report said transit activity at Bab al-Mandeb fell by 30 percent on Tuesday, with total crossings down to 29 vessels from 41 on Monday.

How has this affected insurance prices in Bab al-Mandeb?

The S&P report quoted Marcus Baker, global head of shipping, shipping and cargo at Marsh – a US-based insurance and risk management company – as saying that insurance companies are charging more for risk in the Red Sea and that risk perceptions have risen, although not to the same extent as in the Strait of Hormuz.

He added that the toll for ships passing through Bab al-Mandeb is currently at a rate of 0.5 percent, compared to 0.1 percent for ships sailing on the Red Sea near western Saudi Arabia – from where they go to the Suez Canal, away from the Houthis.