Israel-Iran Conflict Drives Surge in Middle East Shipping Insurance Costs

Key Points

• It seems likely that shipping insurance costs have spiked in the Middle East due to the Israel-Iran conflict, with evidence from multiple sources.

• Research suggests costs for Gulf journeys increased to 0.2% of ship value, up from 0.125%, and Israeli port coverage tripled to 0.7%.

• The evidence leans toward higher risks driving these costs, though exact figures may vary by route and insurer.

Recent Increases
Recent reports indicate that marine insurers are now charging 0.2% of a ship's value for journeys into the Gulf, up from 0.125% before the conflict escalated

Impact on Shipping
The conflict has led to heightened security risks, with some shipowners avoiding the Strait of Hormuz, causing a "modest drop" in ship traffic

Context and Risks
The escalation, including Israel's attacks on Iran and retaliatory actions, has raised concerns about broader instability, influencing insurers to increase premiums to account for potential disruptions in key shipping routes like the Red Sea and Persian Gulf

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Shipping Insurance Costs Spike in the Middle East Amid Israel-Iran Conflict: A Detailed Analysis

The ongoing Israel-Iran conflict, entering its fifth day as of June 19, 2025, has significantly impacted shipping insurance costs in the Middle East, particularly in critical regions like the Persian Gulf, Red Sea, and for voyages to Israeli ports. This note provides a comprehensive examination of the situation, drawing on recent reports from reputable sources to detail the increases, their implications, and the broader geopolitical context.

Overview of Insurance Cost Increases

Recent data from multiple sources confirms a sharp rise in shipping insurance costs due to the heightened risks associated with the Israel-Iran conflict. According to CNBC, marine insurers are now charging 0.2% of the value of a ship for journeys into the Gulf, up from 0.125% prior to the conflict's escalation. This increase reflects the perceived higher risk in the region, as noted by Marcus Baker, global head of marine cargo and logistics at Marsh McLennan

For voyages specifically to Israeli ports, the cost of war risk insurance has seen even more dramatic increases. Reuters reports that the cost for a six-day voyage to Israeli ports has risen to between 0.7% and 1.0% of the ship's value, compared to 0.2% a week ago. This is the highest level since November 2023, when premiums exceeded 2% following a Hamas attack. CNBC also notes that cover for Israeli ports has more than tripled, now at 0.7%.

These increases add significant financial burdens to shipping operations. Reuters highlights that the rise adds tens of thousands of dollars in additional daily costs per voyage, with rates determined on a case-by-case basis, reaching up to 1% for a seven-day call, depending on factors such as cargo type, ownership, and the specific port (e.g., Ashdod, Haifa, Eilat).

Impact on Shipping Routes and Operations

The conflict has not only increased insurance costs but also altered shipping patterns. CNBC reports that some shipowners are avoiding the Strait of Hormuz, a critical chokepoint for global oil shipments, resulting in a "modest drop" in the number of ships passing through. This avoidance is driven by heightened security risks, including potential attacks and disruptions.

The validity of insurance quotes has also been affected, with CNBC noting a reduction from 48 hours to 24 hours, reflecting the rapid changes in perceived risk. For Israeli ports, operations continue, with Haifa port reported as fully operational despite the Haifa oil refinery being shut down on June 16, 2024, after a power station was damaged in an Iranian attack

Geopolitical Context and Broader Implications

The escalation of the Israel-Iran conflict, driven by Israel's surprise attack on Iran and subsequent retaliatory air strikes, has raised concerns about broader regional instability. CNBC details that the conflict, entering its fifth day on June 19, 2025, has led to fresh concerns, including potential U.S. intervention. This uncertainty has prompted insurers to increase premiums to mitigate the risk of attacks or disruptions in key shipping corridors like the Red Sea and Persian Gulf.

The conflict's impact extends beyond insurance costs, potentially affecting global trade, particularly for oil and other commodities that rely on these routes. The increased costs and altered shipping patterns could lead to higher freight rates and supply chain disruptions, with broader economic implications.

Comparative Analysis of Insurance Costs

To organize the data on insurance cost increases, the following table summarizes the changes across different regions and voyage types, based on the sources:

Region/Voyage Type	Previous Rate	Current Rate	Source
Persian Gulf Journeys	0.125%	0.2%	Bloomberg, CNBC
Red Sea (War Risk)	Not specified	Increased	CNBC
Israeli Ports (6-day voyage)	0.2%	0.7% to 1.0%	Reuters
Israeli Ports (7-day call)	Not specified	Up to 1%	Reuters

This table illustrates the significant variations in insurance cost increases, highlighting the particularly sharp rise for Israeli ports compared to Gulf journeys.

Conclusion

In summary, shipping insurance costs have spiked in the Middle East due to the Israel-Iran conflict, with premiums for Gulf journeys rising to 0.2% of a ship's value, war risk insurance for the Red Sea increasing, and cover for Israeli ports tripling to 0.7% to 1.0%. These increases reflect the heightened risks associated with the conflict, including potential disruptions to key shipping routes and broader regional instability. The impact on shipping operations, with some owners avoiding critical routes and additional daily costs in the tens of thousands, underscores the significant economic implications as of June 19, 2025, at 12:40 PM PDT.

Key Citations

• Israel-Iran conflict Shipping insurance costs jump Middle East

• War insurance costs to Israel soar after Iranian attacks sources say

• Mideast Ship Insurance Costs Jump Following Iran-Israel Attacks

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