Maritime insurance prices have soared amid shipping disruptions in the Strait of Hormuz and are also rising for vessels traversing the Bab al-Mandeb, with both waterways – critical channels for the global economy – now theatres of war.

Yemen’s Iran-aligned Houthi group announced a blockade 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 ongoing disruptions in the Strait of Hormuz due to the US-Israel war on Iran. Tehran has insisted that ships consult it before trying to pass, while the US has imposed a naval blockade of Iran-linked ships.

Iran’s Islamic Revolutionary Guard Corps (IRGC) said on Thursday that an explosion set a tanker ablaze in the Strait of Hormuz after it attempted to navigate the southern route off the coast of Oman. The IRGC claimed the three ships were acting under US orders and had “intended to pass through the mine-laid route south of the Strait of Hormuz”.

Marine insurance premiums for ships traversing the strait have surged, with war-risk insurance costs rising from 1-3% of a ship’s hull value to between 7.5 and 10%, according to S&P Global. For a 270,000-metric-tonne tanker, insurance could cost about $21 million.

In the Bab al-Mandeb Strait, transit activity fell sharply by 30% on Tuesday after Houthi attacks on Saudi tankers. Insurance premiums for vessels traversing the strait are currently at 0.5% of hull value, up from 0.1% for ships navigating the Red Sea away from Houthi range.

Source: www.aljazeera.com