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Middle East Tanker Attacks Send Ship Insurance Soaring - Platts

Logistic News - Published on Tue, 18 Jun 2019

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Platts reported that the recent spike in attacks on tankers near the Persian Gulf is inflating insurance premiums for ships transiting through the wider Middle East, increasing the cost of transporting oil from the region. Insurance rates for crude oil tankers loading in the Middle East are now up to 20 times higher following the latest attacks. A shipping insurance source said shipowners now have to pay 0.1%-0.4% of the vessel value in insurance, compared with 0.02% prior to the attacks. The source said that “Underwriters are terrified it will happen again over the next few days.”

Shipping sources said that in some cases, marine insurance underwriters are reluctant to even offer coverage for oil tankers loading in region. Two tankers were attacked in the Gulf of Oman on Thursday, next to the Strait of Hormuz, a critical chokepoint through which 30% of the world’s seaborne oil transits. These incidents came almost a month after four oil tankers were sabotaged near Fujairah, UAE.

WAR RISK PREMIUM

Sources said that any further attacks in the region are expected to lead to a revision in insurance premiums for ships transiting through the region.

A London-based broker from the Edge Group, which provides marine, finance and trade insurance, said that “At the moment with these additional attacks, it has become likely that the situation may deteriorate further. Underwriters are trying not to offer coverage if possible, especially for tankers in this region. However, when pushed we are seeing rates of between 0.1%-0.4% of the vessel value. This situation may calm down over the coming weeks, but it really depends on how the situation develops.”

The Joint War Committee of insurance body Lloyd’s Market Association on May 17 issued a circular adding the Persian Gulf and adjacent waters including parts of Gulf of Oman to the list of areas under risk of “Hull War, Piracy, Terrorism and related perils” following the Fujairah attacks.

FREIGHT RATE IMPACT MUTED

Despite the significant impact on insurance, freight rates have not yet seen a significant rise. A lack of demand from charterers and an oversupplied tanker market has kept a lid on freight rates in the region.

A shipbroker said that “There is not enough inquiry at the moment and tonnage is still willing to go there. I don’t think rates will jump just yet, the market will hold off till next week anyway.”

Source :

Posted By : Mohan Sharma on Tue, 18 Jun 2019
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