Hormuz insurance premiums hit 5% of value

War-risk insurance for a single Hormuz passage now costs 4%-5% of a vessel's hull value, up from roughly 0.25% before the conflict (S&P Global). Some quotes have hit 10% (CNN). For a large vessel, that turns a short passage into a multimillion-dollar insurance decision. The Strait of Hormuz is formally open under international law. None of that matters to a shipowner who cannot get insured.

Trump scrapped his proposed 20% cargo charge on July 14 but kept the US blockade on Iranian ports and continued strikes (WLRN). The fee was political theatre. The private risk decisions that determine whether Gulf voyages actually happen have not changed: insurers, banks and compliance teams are still pulling back.

Cover That Vanishes Before the Ship Arrives

The IMO Council (the UN's shipping authority) reaffirmed on July 10 that no state may toll or suspend transit passage through the strait (gCaptain). UNCLOS (the UN Convention on the Law of the Sea) guarantees the right. Legal rights, though, do not produce voyages.

Gulf war-risk policies are written in seven-day blocks with 48-72 hour cancellation clauses (Marsh). Cover can be repriced or pulled before a ship reaches the strait. P&I clubs, the mutual insurers that cover liability, pollution and crew claims, are no longer treating Gulf passages as routine. Each voyage gets assessed individually, with owners required to confirm their risk exposure before sailing (The Swedish Club). About 1,150 cargo vessels sat stranded in the Gulf as of July 10 (CNN).

Sanctions compound the squeeze. On July 7, OFAC (the US Treasury's sanctions enforcement arm) revoked General License X1, a temporary waiver that had allowed some Iranian oil transactions (A&O Shearman). Near-comprehensive prohibitions on Iranian petroleum trade snapped back into force. Banks and charterers do not wait for courts to sort this out. They pull back the moment enforcement risk rises (Bracewell). The result is a strait that is legally open but commercially shut.

Who in Europe Absorbs the Cost

The crisis hits Europe unevenly. On July 13, the Cyprus-flagged M/V GFS Galaxy was fired on near Musandam, at the entrance to Hormuz (CNA, Cyprus Mail). Cyprus opened an investigation. It can regulate ships on its registry. It cannot reopen the strait or compel insurers to write cover. An abstract commercial crisis became a flag-state problem for an EU member state.

Italy's shipowners' association Assarmatori estimated extra war-risk premiums of 1%-10% of vessel value and an 8%-10% fall in Italian port movements (Adnkronos). Italian maritime reporting frames the problem as voyages becoming impossible to finance, not as an oil shortage (Messaggero Marittimo). War-risk cover, charter-party terms, crew decisions and letters of credit all price the same danger independently.

Poland is exposed through price benchmarks, not direct Gulf imports. Its Swinoujscie LNG terminal imported almost exclusively from the US in the second quarter, with no Qatari cargo after force majeure (24 Kurier). But Poland buys gas on the same European market as everyone else: the Dutch TTF benchmark (Europe's main gas price reference) rose about 5% to €49 per MWh after the US-Iran deal collapsed (Sahm Capital/Reuters). Romania's energy minister warned the same price transmission would reach consumers through refined products and fertilizer costs (Euronews Romania).

Europe Can Cushion. It Cannot Command.

The European Commission's Energy Union Task Force said on July 13 that there was no immediate EU gas supply crisis and storage targets remained achievable, though prices stayed above pre-conflict levels (European Commission). The EU can draw on mandatory oil stocks. It can invoke the Blocking Statute (a regulation shielding EU companies from certain extraterritorial sanctions). Neither tool reopens a shipping lane or forces a bank to clear a payment.

The Council on Foreign Relations warned there is no precedent for unwinding disruption at this scale, and that even optimistic recovery would be partial, costlier and vulnerable to renewed setbacks (CFR). Europe's governments can cushion the price shock. But whether a Gulf voyage actually happens now sits with underwriters writing seven-day policies hours before departure, and compliance officers screening counterparties one cargo at a time. That is where Europe's energy security is being decided, and no capital in Europe controls it.