Marine Insurers Cancel War Risk Cover, Tanker Costs To Rise as Iran Conflict Intensifies

SINGAPORE, March 2 (Reuters) – Marine insurers are cancelling war risk coverage for vessels and oil shipping rates are set to surge further after the widening Iran conflict left at least three tankers damaged, a seafarer killed and 150 ships stranded around the Strait of Hormuz.

In the Strait of Hormuz and surrounding waters, at least 150 vessels including oil and liquefied natural gas tankers had dropped anchor, shipping data showed on Sunday.

Typically, ships carrying oil equal to about one-fifth of global demand from Saudi Arabia, the United Arab Emirates, Iraq, Iran, and Kuwait sail through the Strait along with tankers hauling diesel, jet fuel, gasoline and other products.

The disruption sparked a 9% jump in global oil prices on Monday.

INSURERS CANCEL WAR RISK COVER

Companies including Gard, Skuld, NorthStandard, the London P&I Club and the American Club said their cancellations would take effect from March 5, according to notices dated March 1 on their websites.

War risk cover will be excluded in Iranian waters, as well as the Gulf and adjacent waters, according to the notices.

Skuld added in its notice that it was working on a buy-back option to reinstate cover.

OIL SHIPPING COSTS TO RISE FURTHER

Meanwhile, costs of shipping oil from the Middle East to Asia – already at six-year highs – are set to rise further as the widening Iran conflict is deterring shipowners from sending vessels to the region, market sources and analysts said on Monday.

Spot shipping rates from the Middle East to Asia, more commonly known as TD3C , are expected to extend gains, shipbrokers said. The benchmark has nearly tripled since the start of 2026.

Brokers pegged the spot rate for hiring a very large crude carrier on the key Middle East to China route early in Asia on Monday about 4% higher than on Friday, near W225 on the Worldscale industry measure or equivalent to at least $12 million.

EXPONENTIAL RISE

“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 LSEG analyst.

There is still a lot of uncertainty on where the final rate would be on Monday but all Middle East loading routes are expected to hold firm, a shipbroker said. They declined to be named as they were not authorised to speak to the media.

Meanwhile, the market will need more ships to load crude from the U.S. and West Africa on longer voyages which could support freight on those routes, a source from a shipping company said.