Marine Insurers Cancel War Risk Cover as Iran Conflict Escalates, 150 Vessels Stranded Near Strait of Hormuz

Global shipping markets are facing renewed turmoil after major marine insurers announced the cancellation of war risk coverage in Iranian waters and surrounding Gulf areas, as escalating hostilities between Iran, the United States and Israel intensify security threats to commercial vessels.

The widening conflict has already resulted in at least three tankers being damaged, one seafarer killed, and approximately 150 vessels stranded or anchored around the Strait of Hormuz, according to shipping data released Sunday. The developments are sending shockwaves through global oil markets and freight rates.

War Risk Insurance Suspended in High-Risk Waters

Leading marine insurers including Gard, Skuld, NorthStandard, London P&I Club, and American Club confirmed through notices dated March 1 that war risk coverage will be excluded from March 5 onward for vessels operating in Iranian waters, the Gulf and adjacent areas.

The move effectively leaves shipowners exposed to heightened financial liability in one of the world’s most strategically critical maritime corridors.

Skuld indicated it is exploring a buy-back option that could allow shipowners to reinstate coverage under revised terms. Meanwhile, Japan’s MS&AD Insurance Group told Reuters it has suspended underwriting of several war-risk related policies covering waters near Iran, Israel and neighboring states.

Industry analysts say the rapid withdrawal of insurance signals a severe reassessment of maritime risk in the region.

150 Ships Drop Anchor in Strait of Hormuz

Shipping data shows that at least 150 vessels, including oil and liquefied natural gas (LNG) tankers, dropped anchor in and around the Strait of Hormuz on Sunday amid security concerns.

The Strait remains one of the world’s most critical chokepoints, with vessels transporting crude oil equivalent to roughly one-fifth of global consumption passing through daily. Exports from Saudi Arabia, the United Arab Emirates, Iraq, Iran and Kuwait , along with shipments of diesel, jet fuel, gasoline and other refined products , rely heavily on this route.

The disruption contributed to a sharp 9% surge in global oil prices on Monday, reflecting market fears of supply instability.

Oil Shipping Costs Set to Climb Further

Freight markets are reacting just as strongly. Spot shipping rates for crude oil transport from the Middle East to Asia , already at six-year highs , are expected to rise further as shipowners grow reluctant to deploy vessels into the conflict zone.

The benchmark TD3C route, which measures very large crude carrier (VLCC) rates from the Middle East to China, has nearly tripled since the start of 2026.

On Monday, brokers pegged the spot rate for hiring a VLCC on the key Middle East–China route at approximately 4% higher than Friday levels, near Worldscale W225 , equivalent to at least $12 million per voyage.

“TD3C rates were rising exponentially before the attacks and will continue to remain elevated as countries scramble to meet their energy needs,” said Emril Jamil, a senior analyst at LSEG.

Market participants say uncertainty remains over final freight levels, but all Middle East loading routes are expected to remain firm amid tight tonnage supply.

Ripple Effects across Global Shipping

With fewer vessels willing to call at Gulf ports, charterers may increasingly turn to longer-haul crude routes from the United States and West Africa. That shift could support freight rates on Atlantic Basin routes as additional ships are required for extended voyages.

Industry sources warn that the suspension of war risk cover may also trigger higher security premiums, tighter underwriting conditions, and increased compliance scrutiny for vessels operating in high-risk zones.

The combination of geopolitical escalation, insurance withdrawal, tanker damage, and freight volatility underscores the growing vulnerability of global energy supply chains centered on the Strait of Hormuz.

As tensions persist, shipowners, insurers and charterers face mounting operational and financial uncertainty ,with implications likely to reverberate across oil markets and maritime trade in the days ahead.