Hormuz Fees Drive Insurance Spike

Every day, about 20 million barrels of oil move through the Strait of Hormuz, the narrow stretch of water between Iran and Oman. The familiar fear is that it might be shut. The more plausible risk now is subtler: Hormuz remains open, but access starts to carry different prices depending on which flag, owner or customer is judged politically acceptable.

Iran and Oman are pushing ahead with a plan to charge vessels using the strait or related maritime services, while offering preferential treatment to "friendly" countries. There is no enforceable legal text yet, and Washington objects (Gulf News, via Times of India). That has not stopped the market doing what it always does first: pricing the uncertainty before the lawyers finish drafting.

How a political proposal becomes a shipping cost

The route from a Gulf proposal to European factory costs is fairly direct. Insurers move first, raising the price of cover for ships entering the area. Shipping lines then pass on the cost through surcharges. Importers pay more for energy, chemicals and raw materials. Manufacturers feel it before households see it.

The choke point is insurance. War-risk premiums, the extra charge for sending a vessel into a conflict-adjacent zone, have risen from almost nothing to roughly 1–4% of a vessel's hull value for a single crossing. For a laden tanker, that can mean an additional $2–8 million on one transit (DW). Before the recent escalation, premiums were closer to 0.05–0.25% (Khaleej Times, Corriere della Sera).

The bigger issue is not the fee itself. It is the commercial veto that insurers hold. West of England P&I Club, a mutual insurer covering shipowner liability, has warned members that Hormuz cover can be cancelled or repriced at any point (West P&I). A ship may be legally entitled to sail and still be commercially stuck if cover disappears. That is why Iran's proposal is already having an economic effect: a system that leaves "unfriendly" vessels in legal uncertainty gives insurers every reason to keep risk priced high.

Europe pays the world price

Europe is not especially dependent on Gulf oil and gas in a direct sense. About 84% of crude moving through Hormuz goes to Asia (EIA). Germany's LNG, liquefied natural gas shipped by tanker and turned back into gas at port, comes mainly from the US (t-online). Qatar supplied roughly 6.6% of EU LNG imports in early 2026 (Trade Arabia).

That sounds reassuring until you remember how energy is priced. Oil and gas trade off global benchmarks, reference prices used by buyers far from the cargo itself. If Hormuz risk makes Asian-bound oil more expensive, European buyers do not get to stand outside the market and pay yesterday's price.

Germany is already showing how exposed industry is to imported energy pressure. Destatis reported that May import prices were up 6.8% year-on-year, with imported energy up 37.2% and fertilisers and nitrogen compounds up 31.4% (Destatis). That does not prove Hormuz caused the increase. It shows the channel is open: German manufacturers are already carrying higher imported energy costs, and Gulf risk adds another layer.

The Netherlands faces a similar problem through Rotterdam, the refining and bunkering centre that fuels ships and feeds European supply chains. CBS says the country is 77% dependent on foreign energy (CBS). Dutch parliamentarians have already connected developments in Hormuz with fertiliser costs (Tweede Kamer).

Who gains, who loses

The first winners are the larger shipowners. BIMCO analysis found that uncertainty around Hormuz supports higher freight rates (Cyprus Shipping News). Maersk kept operating in the Gulf, while analysts described the escalation as "short-term positive" for carrier earnings (BT).

The losers are less able to pass the cost along: energy-intensive manufacturers, smaller importers facing emergency surcharges of $300–$7,200 per container on cargo already moving, and firms dependent on fertiliser and chemical inputs. DNB research identifies imported energy prices as a central short-term driver of euro area inflation, while the ECB notes that energy shocks still work their way into transport, food and industrial costs (DNB, ECB).

The hardest question is compliance. If the fee has to be paid through sanctioned Iranian entities, any company that pays may risk US secondary sanctions, the penalties Washington applies to non-US firms doing business with sanctioned parties (OFAC). Refusing to pay may mean delay or the loss of insurance. Whether Oman can provide real legal cover has not been tested. Insurers, meanwhile, run on their own risk calendars, not diplomatic statements (LMA). Hormuz is still open. The terms of passage are changing.