What the U.S.-Israel War on Iran Means for Global Shipping and Marine Insurance as the Strait of Hormuz Remains Closed

There are moments in maritime history that redefine how the industry operates, sometimes just for a season, sometimes for years. We are living through one of them right now.

As of today, March 26, 2026, the Strait of Hormuz, the narrow passage between Iran and Oman through which roughly 20 percent of the world's seaborne oil and global LNG once flowed freely, is effectively closed to commercial shipping. This post is an attempt to lay out what happened, where things stand, and what it means from a marine insurance perspective.

How We Got Here

On February 28, 2026, the United States and Israel initiated coordinated airstrikes on Iran under Operation Epic Fury, targeting military facilities, nuclear sites, and leadership, including the killing of Supreme Leader Ali Khamenei. Iran's response was swift and consequential. The Islamic Revolutionary Guard Corps issued warnings via VHF radio prohibiting vessel passage through the strait, leading to an effective halt in shipping traffic.

On March 2, the IRGC officially confirmed that the strait was closed to "unfriendly nations," allowing only Iran-approved vessels to pass. On March 4, the IRGC claimed it had achieved "complete control" of the strait. As of March 12, Iran had made 21 confirmed attacks on merchant ships.

The closure has since been described by economists and energy analysts as the largest disruption to the energy supply since the 1970s energy crisis.

The Transit Picture Today

The situation on the water is not a simple binary, open or closed. The strait is neither fully closed nor operating as a normal commercial corridor. A limited number of vessels continue to transit, but flows remain heavily suppressed and shaped by security conditions, political dynamics, and operational constraints.

The numbers tell the story plainly. Windward's March 20 assessment shows that observed Strait of Hormuz transits have declined by approximately 94.2 percent from a pre-war average of about 120 per day to roughly 7, alongside an 84.4 percent reduction in large vessels present in the corridor.

Hundreds of tankers remain stranded at anchorages and ports on either side of the strait. At least seven tankers have been struck by drones or missiles in waters off Oman and the UAE and at port in Bahrain since hostilities escalated.

What movement does exist is tightly controlled. Iran has established a selective passage regime through the chokepoint, exporting its own oil and natural gas while permitting safe passage to countries that pay what amounts to a toll, and denying transit to all others. Ships attempting passage are increasingly having to coordinate directly with Iranian authorities to obtain clearance.

The bypass options are not faring much better. Several drones struck Oman's deep-water ports of Duqm and Salalah, with at least one fuel storage tank in Duqm damaged. The London insurance market's Joint War Committee subsequently included waters around Oman in its list of high-risk maritime areas.

The Compounding Effect: Hormuz and the Red Sea

This crisis does not exist in isolation. Houthi forces resumed attacks on commercial vessels in the Red Sea on February 28, 2026, following the U.S.-Israeli strikes on Iran. The simultaneous disruption of both the Strait of Hormuz and the Red Sea passage has effectively eliminated the two primary routing corridors connecting the Persian Gulf to global markets. Jebel Ali Port in Dubai, the largest container port in the Middle East and a critical transshipment hub, is experiencing congestion from vessels that diverted following the closure.

QatarEnergy declared force majeure on all LNG shipments on March 4 after Iranian attacks on its Ras Laffan facilities. Qatar and the UAE together represent an enormous share of Asian LNG supply, accounting for 53 percent of India's LNG imports, 72 percent of Bangladesh's, and 30 percent of China's.

What This Means for Marine Insurance

This is the part of the story I want to spend the most time on, because it is where the crisis becomes most directly relevant to shipowners, charterers, and cargo interests, and frankly, where most coverage falls short of what operators assumed they had.

The short version: the insurance market moved faster than the ships did.

Within 48 hours of the February 28 strikes, war risk premiums surged fivefold, major marine insurers terminated existing coverage and offered replacements at significantly elevated rates, and Lloyd's Joint War Committee redesignated the entire Arabian Gulf as a conflict zone. Tanker traffic collapsed by more than 80 percent. The commercial shutdown preceded the physical blockade. Insurance closed the strait before Iran's IRGC navy did.

War Risk Premiums: The Numbers

The premium escalation has been dramatic. In the days before the strikes, war risk premiums for the strait were already rising, moving from 0.125 percent to between 0.2 and 0.4 percent of ship insurance value per transit. Then the strikes began.

War risk premiums rose as high as 1 percent of the value of a ship within 48 hours of hostilities, up from around 0.2 percent the prior week. For a tanker worth $100 million, the war risk premium for a single voyage jumped from roughly $200,000 to approximately $1 million.

By late March, the situation had deteriorated further. David Osler, finance editor at Lloyd's List, noted that before the fighting, typical rates for the Strait of Hormuz were 0.15 to 0.25 percent of hull value for a one-week policy. Since the conflict began, quotes have been as high as 5 to 10 percent of hull value. For a very large crude carrier valued at $100 million, that means several million dollars in additional costs for a single transit.

Daily charter rates for oil supertankers quadrupled to nearly $800,000 per day.

P&I Cover Cancellations and the JWC Designation

War risk hull premiums are only one piece of the picture. The cancellation of Protection and Indemnity war risk extensions has been equally disruptive. All 12 members of the International Group of P&I Clubs, the mutual marine insurers that cover about 90 percent of the world's ocean-going tonnage, gave 72 hours' notice of cancellation of parts of their war cover in the Gulf.

The withdrawal of reinsurance support reflects the growing risk faced by insurers as vessels cluster in a confined area amid rapidly escalating hostilities. Reinsurers considered the aggregation risk of hundreds of ships in one location, the expanding geographical scope of attacks on ports and energy infrastructure across the region, and the uncertainty surrounding how long the conflict would last.

From a legal standpoint, the situation is triggering War Risk Clauses in charter agreements such as BIMCO's CONWARTIME, which allow captains to refuse orders to enter the Persian Gulf if the risk to crew and vessel is assessed as too high. Shipowners and charterers are facing a wave of frustrated contracts, and the legal disputes that follow will be significant.

Hapag-Lloyd implemented a War Risk Surcharge of up to $3,500 per container as of March 2, 2026. CMA CGM introduced an Emergency Conflict Surcharge ranging from $2,000 to $4,000 per container depending on equipment type.

The Geopolitical Dimension

U.S. officials have privately acknowledged that reopening the strait is a problem without a clear solution, with one intelligence official describing it as "one of the core conundrums of this conflict." The Iranians have real leverage, and there is not an obvious fix.

On March 21, President Trump issued an ultimatum to Iran demanding it fully open the strait within 48 hours, threatening strikes on Iranian power plants. In response, Iran doubled down, threatening to completely close the strait and strike vital energy and desalination infrastructure across the region. As of today, a total of 22 countries, including the United Kingdom, France, Germany, Japan, Bahrain, and the UAE, have signed a statement declaring willingness to contribute to efforts to ensure safe passage.

The strait remains central to global energy flows, and current conditions are sufficient to sustain a persistent geopolitical risk premium. The situation is evolving rapidly and what is true today may shift within days.

What Operators Need to Understand Right Now

The lessons from this crisis will be studied and written about for years. But for shipowners, charterers, and cargo interests operating in or near the Gulf today, a few things stand out.

First, war risk insurance is not a formality, it is a lifeline, and it can disappear faster than most operators anticipate. The 72-hour cancellation notices issued by P&I clubs in early March caught many unprepared. Understanding the exact scope of your war risk extensions, what they cover, what triggers their cancellation, and how quickly you can obtain replacement cover, is not optional.

Second, the CONWARTIME clause and its equivalents give crews and masters significant authority to refuse orders into designated war zones. That is a contractual and operational reality that charterers need to factor into any voyage planning in or near the Persian Gulf right now.

Third, the geography of bypass routes is itself deteriorating. Oman was expected to be the principal alternative to a closed strait, and drone strikes on Duqm and Salalah changed that calculus quickly. Any routing contingency plan needs to account for second-order disruptions to the alternatives, not just the primary chokepoint.

The Strait of Hormuz has always been the industry's most closely watched pressure point. Right now, it is testing the limits of what the global maritime and insurance industries were built to absorb.