According to trade intelligence platform Kpler, since the Iran war began, more than 500 million barrels of crude and condensate have been knocked out of the global ⁠market, in what seems to be the largest energy supply disruption of modern history. Talking about the immediate impact, Iain Mowat, principal analyst at Wood Mackenzie, told Reuters that the lost fuel may end up curtailing the aviation industry’s energy demand for 10 weeks.

In the Middle East, countries lost about eight million barrels per day of crude production in March, nearly equivalent to the combined production of Exxon Mobil and Chevron, two of the biggest ‌oil companies ⁠in the world. As per Kpler, jet fuel exports from Saudi Arabia, Qatar, the United Arab Emirates (UAE), Kuwait, Bahrain and Oman fell from about 19.6 million barrels in February, to just 4.1 million barrels for March and April so far combined.

“With crude prices averaging around USD 100 a barrel since the conflict began, those missing volumes represent roughly USD 50 billion ⁠in lost revenues,” said Johannes Rauball, a senior crude analyst at Kpler.

The ratio equates to a 1% cut in Germany’s annual GDP, or roughly the entire GDP of smaller European countries such as Latvia or Estonia.

Kpler even stated that the resumption of energy trade through the Strait of Hormuz would mean little for the global economy, as recovery of ⁠output and flows will remain slow. While global onshore crude inventories have fallen by about 45 million barrels so far in April, production outages, since late March, have reached roughly 12 million bpd.

“Heavier crude fields in Kuwait and Iraq could take four to five months to return ⁠to normal operating levels, extending stock draws through the summer. Damage to refining capacity and Qatar’s Ras Laffan LNG complex means full restoration of regional energy infrastructure could take years,” Rauball concluded.

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“The war has already triggered a trade shock, which could potentially and quickly turn into a cost-of-living crisis across Africa due to higher fuel and food prices, rising shipping and insurance costs, exchange rate pressure and tighter fiscal conditions. The extent of this impact would vary across the continent based on levels of import dependency, exposure to the Middle East and global market conditions,” the report noted, while predicting that the continent’s GDP may decline in 2026 by 0.2 percentage points if the conflict’s duration exceeds six months.

According to the study, food prices, in particular, are mainly felt by vulnerable African households, given that most countries are still growing at rates below pre-COVID levels.

“Thus, the longer the conflict lasts and the more severe the disruption to shipping routes and energy and fertiliser supplies, the greater the risk of a significant growth slowdown across the continent,” the report noted.

The Middle East reportedly accounts for nearly 16% of Africa’s imports and 10.9% of its exports. The Strait of Hormuz, the key waterway effectively shut by Iran (to gain geopolitical leverage in the conflict), usually handles a fifth of global oil exports and nearly 90% of Arabian Gulf oil exports.

“Continued escalation of the conflict worsens global instability, with serious implications for energy markets, food security and economic resilience, particularly in Africa, where economic pressures remain acute,” said Mahmoud Ali Youssouf, chairman of the African Union Commission.

“Food security is crucial to Africa, with an estimated population of more than 1.57 billion, as communities across the continent rely on agriculture for their livelihood. A lack of food security can lead to hunger, malnutrition and social instability,” says African Food Security, an agricultural development firm.

The main challenges in the continent’s food sector have been climate change, poor infrastructure, limited access to modern farming technology, political instability, land degradation and rapid population growth.

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However, Asia is also the region that, according to the International Energy Agency (IEA), has two growth engines: China and India, which are leading the continent’s renewable adaptation campaign. Southeast Asian countries also possess immense potential. Should the region double down on green sources to future-proof its energy security and economic outlook?

Rana Adib, the Executive Director of REN21, the global network of diverse stakeholders that enables the necessary changes to build the renewables economy for prosperous lives and societies, shared her insights on Asia’s renewable pursuit in an exclusive interview with International Finance.

An engineer by training, Rana Adib has worked in the private sector and applied research in the fields of renewable energy, energy access, waste management, and the biomethane sector. With her cross-functional profile, she likes to provide solutions that pave the way for a world built on renewable energy. She is also the chair of SLOCAT, an international multi-stakeholder partnership enabling knowledge and action for sustainable, low-carbon transport.

Here are the excerpts from the interview

With crude oil staying above $100 and disruptions in the Gulf, how do you see the global economy coping with this prolonged energy crisis?

In the short term, countries are focused on securing supply and managing demand through measures such as stock releases, subsidies and supply diversification. These can help cushion the immediate impact, but they do not address the underlying structural exposure. With around 20% of global oil trade passing through the Strait of Hormuz, disruptions quickly translate into higher energy prices, inflationary pressure and impacts on industrial competitiveness, particularly in import-dependent economies across Asia and Europe.

This situation highlights a broader point: systems that rely heavily on traded fossil fuels remain inherently exposed to geopolitical risks and price volatility.

After repeated energy shocks since 2022, do you think renewables are shifting from an option to a necessity?

Yes — increasingly, this shift is being driven by affordability, efficiency and resilience. Renewables are now among the lowest-cost sources of new power in many regions and offer greater price stability, unlike fossil fuels, whose costs are subject to global market fluctuations. As prices rise, households and industries are directly affected, while renewables combined with electrification can reduce long-term exposure to these shocks.

At the same time, energy efficiency is becoming more central. Electrified solutions such as electric vehicles and heat pumps are significantly more efficient than combustion-based systems, meaning less energy is required to deliver the same services — helping to lower costs and reduce vulnerability. Countries that rely heavily on imported fossil fuels remain structurally exposed. By contrast, systems built on renewables, electrification, efficiency and flexibility can improve resilience over time. In this context, renewables are increasingly seen not only as a climate solution, but as a key component of economic stability and energy security.

What is the likelihood of Asian governments accelerating the transition to alternatives beyond petrol, diesel, and gas?

In many cases, the current context is likely to reinforce this direction, although the transition may not be linear. Some governments may adopt short-term measures involving fossil fuels to manage immediate pressures. At the same time, the crisis is strengthening the case for electric mobility, public transport, clean electricity, storage and heat pumps, as well as for expanding domestic renewable energy supply. Given Asia’s significant reliance on imported fuels, there is a growing incentive to reduce exposure through electrification, energy efficiency and locally available renewable resources.

With global EV sales reaching 1.1 million units in February 2026, do you expect this growth to sustain or peak soon?

The outlook is likely to be more nuanced rather than indicating a clear peak. Overall, car sales may face downward pressure due to weaker consumer spending and broader economic uncertainty. However, the key trend is that the share of EVs within total car sales continues to increase. EVs represented over 20% of global car sales in 2024 and are on track to exceed 25% in 2025. In leading markets, shares are already significantly higher, including around 50% in China, while others such as South Korea (around 10%), Japan (around 2%–3%) and India (around 3%) remain at earlier stages, highlighting significant room for growth.

This suggests that accelerating investment in EVs, charging infrastructure and enabling policies could play an important role in reducing fuel import dependence and strengthening energy security.

Should automakers prioritise affordability to meet rising EV demand?

Affordability is now central to the next phase of EV adoption. Automakers are already shifting in this direction, driven by weaker consumer demand, geopolitical pressures and rising competition. At the same time, EV economics have improved significantly. In many markets, EVs are already cheaper to own and operate over their lifetime, and upfront costs are moving toward parity. The challenge is therefore no longer technology, but access — ensuring affordable options, financing and scale for mass-market adoption.

With countries like China, India, and Japan leading renewable adoption, should other Asian economies follow more aggressively?

The broader regional trend suggests increasing momentum, but the current crisis also shows that the transition is not always linear. In the short term, many countries are focused on securing fuel supply and managing demand, including subsidies, diversification, and emergency measures. However, this situation is already reinforcing the case for accelerating renewables, electrification and energy efficiency as more durable solutions.

China and India continue to drive large-scale renewable deployment, while Japan is expanding within a more constrained system. South Korea is also pursuing more ambitious renewable expansion plans, particularly in solar and offshore wind. At the same time, other Asian economies remain at earlier stages, highlighting significant room for growth. Countries that have already expanded domestic renewable capacity are generally less exposed to price volatility, which is becoming an increasingly important consideration.

Scaling up renewables, electrification, and efficiency can help reduce exposure to volatile fuel import costs, in addition to improving resilience to external shocks, supporting domestic economic development and new industries. In this context, accelerating the transition is increasingly seen not only as a climate priority, but as a strategic economic and energy security decision.

Despite leading Asia’s renewable adoption charge, Japan and South Korea are feeling the brunt of the global energy crisis, given their dependence on imported fuel. Should these nations take a hard look at their energy sourcing practices?

The current crisis underscores the structural dependence of both countries on imported fuels. Japan sources the vast majority of its crude oil (around 90%) from the Middle East, while South Korea imports roughly two-thirds from the same region, with much of this supply transiting through key chokepoints, such as the Strait of Hormuz. While both maintain strategic reserves, these provide only a short-term buffer.

Reducing this exposure over time will depend on accelerating domestic renewables, electrification, grid and storage infrastructure, and energy efficiency. More broadly, this reflects a shift in how energy security is being understood, from securing fuel supply to reducing reliance on imported fuels altogether.

Japan, after the 2011 Fukushima disaster, took a backseat in expanding its nuclear industry. Do you see things changing in this front post-Gulf crisis?

Japan’s energy policy had already begun evolving before the current crisis, with a more balanced approach that includes both renewable expansion and a gradual return of nuclear power. The current context may reinforce discussions around nuclear energy in terms of energy security. However, nuclear developments typically involve long timelines and remain subject to public acceptance considerations. In the near term, measures such as accelerating renewables, electrification and energy efficiency are likely to play a more immediate role in strengthening energy resilience.

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Antony Froggatt, Senior Director for Aviation, Climate, Energy, and Shipping at T&E, a Brussels-based NGO advocating clean transport and energy, told International Finance, “Many forecasters, such as the IMF (If energy prices sustain just a 10% increase over one year, this would add 0.4 percentage point to inflation and slow economic growth by 0.1%-0.2%,) and Fitch, suggest that higher energy prices will negatively affect global inflation and reduce global growth. The extent of these will depend on how high prices get, and how long they remain high.”

Jan Rosenow, Professor of Energy and Climate Policy at Oxford University and Senior Associate at Cambridge University, said, “The short-term pain is real. Higher inflation, squeezed household budgets, and recession risk in energy-intensive economies. But the adjustment mechanisms are also kicking in: strategic reserve releases, demand destruction, and accelerated supply from non-Gulf producers. The deeper concern is duration. A shock that lasts months reshapes investment decisions in ways that a spike lasting weeks does not.”

Clean energy pivot: A Must For Asia Now

In 2026, Asia has become the Europe of 2022. Back then, Russia, in response to the Western sanctions for the Ukraine war, significantly cut natural gas supplies to the continent, resulting in high energy prices and a cost-of-living crisis. Asia, which buys more than 80% of the crude that transits the Strait of Hormuz, is now facing an “energy emergency.”

This could prompt Asia to have a re-look at renewables and initiatives to future- proof both its energy security and economic outlook.

Froggatt commented, “I would argue that renewables have been a necessity for some time, and the economic case for them is even stronger now. As far back as 2020, the International Energy Agency called solar PV the ‘cheapest source of electricity in history’. Since then, the costs of not only renewables (solar and wind), but also storage options, particularly batteries, have continued to fall.”

Rosenow remarked, “Each successive shock – 2022, and now this – makes the economic and security case for domestic clean energy harder to ignore. Renewables are not just cheaper in many markets; they are now the geopolitically safer choice. The question is no longer whether to accelerate the transition but how fast institutions can move.”

EV: The Best Starting Point

Stating that higher fossil fuel prices affect consumers’ cost of living and the balance of payments of importing countries, Froggatt believes episodes like the 1970s global oil price spikes, and the European energy crisis in 2022 will only motivate policymakers to accelerate their efforts to limit their dependence on fossil fuels for economic and supply security reasons.

“We saw this in the EU with the introduction of the ‘Fit for 55’ package in 2022 to accelerate the transition away from imported fossil fuels. However, the majority of these measures will take time to have an effect. If we want to really reduce dependency on fossil fuel, structural changes with new investment are needed, particularly in infrastructure, such as the grids and buildings,” he stated.

Rosenow, on the other hand, remarked, “The pressure is certainly there. Asia bears the heaviest volumetric burden from Hormuz disruptions, and governments that were already energy-insecure are now facing acute supply anxiety. I’d expect faster permitting of renewables, more serious electrification policy, and renewed interest in long-term LNG alternatives – though the pace will vary significantly by country.”

To deal with the “energy emergency,” Asian countries are advocating solutions like a four-day workweek and preventing unnecessary travel to save fuel. This might make electric vehicles more attractive.

Froggatt says, “I would assume that sales will continue to increase. Globally, only around 10% of car sales are electric, but in leading countries, such as China and Vietnam, we are already seeing over 40% of car sales being electric. Consequently, as the cost of electric vehicles continues to fall and charging infrastructure becomes more available and robust, the pace of sales growth will accelerate, especially in an era of high fossil fuel prices.”

Froggatt also pointed out that in Europe, car manufacturers have failed to develop smaller, low-cost EVs fast enough. This is part of the reason why Chinese vehicles are entering the EU market so quickly.

“I think it is incumbent on all car manufacturers to make EVs to meet a variety of consumer requirements, which include those that are most affordable,” he said.

So, Asia should focus on the affordability factor, introducing tax credits for consumers, apart from setting up intensive charging networks.

“There have been significant cost reductions already. And in many markets, EVs are close to or at cost-parity over their lifetime. Further cost reductions are needed to shift the market faster to EVs,” Rosenow noted, while adding, “The underlying drivers – policy support, falling battery costs, expanding model ranges – remain intact. Short-term, high fuel prices actually reinforce the EV value proposition. The risk to growth is on the supply side: critical mineral availability and manufacturing capacity. I don’t see a near-term peak, but the rate of growth will inevitably moderate as markets mature.”

The Continent Holds Promise

As per the International Energy Agency’s (IEA) Renewables 2025 report, two of Asia’s growth engines, China and India, along with the United States and Europe, were responsible for clean energy’s global expansion. Southeast Asia holds promises too. With an estimated 20 terawatts of untapped solar and wind potential (equivalent to around 55 times the region’s current total power capacity), the IEA sees the region as being more than capable of securing its energy security through the renewable route.

“The case for doing so has never been stronger. Energy import dependence is now visibly a security and economic liability, not just an environmental one. Southeast Asian economies, in particular, have strong renewable resource endowments – solar, geothermal, offshore wind – that remain underexploited. The Gulf crisis should be the catalyst for a serious regional rethink,” Rosenow said.

Froggatt too observed, “It is not just countries in Asia that can and should accelerate their use of renewable energy. Without accelerating deployment in the EU, the 2030 renewable energy target of at least 42.5% of energy from renewables will not be met. In developing countries, renewable energy is a way to meet rapidly increasing demand. Governments can take several steps to support the renewable energy sector. They can reduce construction risks and costs through accelerated planning, grants, soft loans, and other measures. Furthermore, they can implement support schemes, such as contracts for difference or feed-in tariffs, that create stable revenues. Governments can also help develop local supply chains, which provide additional price security and create local jobs. Finally, governments can set targets for renewable energy use, which gives confidence to investors.”

While noting that higher rates will raise the cost of capital precisely when deployment needs to accelerate, Rosenow advised, “The policy response matters enormously here: blended finance, public guarantees, and development bank support can reduce the risk premium that makes projects unfinanceable in the private market alone. Countries that get this right will attract investment; those that don’t will fall behind.”

Despite investing heavily in offshore wind, solar, and hydrogen strategies, Japan and South Korea still fulfil a massive chunk of their energy requirements through imported fossil fuels. Both of them are feeling the Hormuz pinch right now.

Rosenow said, “This crisis is a stress test they (Japan and South Korea) were always likely to fail. Both countries have made genuine progress in renewables but remain structurally dependent on imported fossil fuels in ways that leave them exposed to exactly this kind of shock. A serious reassessment of domestic generation capacity is overdue.”

Maybe, it’s time for Japan to shed the ghost of Fukushima.

Froggatt said, “Electricity generated from renewable energy is, under most conditions, far cheaper than that generated by nuclear power. In addition, renewable energy generation is much quicker to build. Therefore, although some countries may look again at nuclear power, I think that the higher costs and slowness to build – especially in countries that don’t already have a nuclear sector – will reduce the number of countries that actually start building nuclear power plants.”

Rosenow concluded, “The political and public calculus on nuclear in Japan was already shifting before this crisis, with several reactors being restarted. A prolonged Gulf disruption accelerates that conversation considerably. Energy security concerns now outweigh, for many policymakers, the post-Fukushima caution. I would expect Japan to move more decisively on restarts over the next few years.”

The post IF Insights: War in Middle East likely to accelerate Asia’s renewable energy revolution appeared first on International Finance.

The Wall Street brokerage, as per the reports, has cut its rating on global equities to “equal weight” from “overweight”, while raising US Treasuries and cash to “overweight” from “equal weight.”

“Uncertainty around magnitude and duration of oil supply disruption means outcomes for risk assets have become increasingly asymmetrical,” Morgan Stanley strategists said.

Brent has soared 59% in March 2026, ⁠its steepest monthly jump, even exceeding gains seen during the 1990 Gulf War, as the Strait of Hormuz remains choked, affecting the flow of 20%–25% of global seaborne oil and 20% of LNG trade. Futures have already climbed above USD 116 a barrel.

The brokerage warned that if oil prices stay at around USD 150-USD 180 per barrel, global equity valuations could shrink nearly 25%. It has also ‌trimmed its overall ⁠equity exposure ⁠through a downgrade in the United States, apart from terming Japanese stocks to “equal weight” from “overweight.”

“We turn equal weight on Japanese stocks given negative tail risks as we ‌expect them to come under pressure from ⁠supply chains and global recessionary impacts in a scenario where the Strait of Hormuz remains closed for longer,” Morgan Stanley strategists said, while advocating a preference for American stocks compared to other regions, given higher earnings-per-share growth.

In 2025, investors shunned their United States-based assets due to tariff-related uncertainties and ended up rotating cash to European, Japanese and emerging ‌markets.

However, in 2026, there has been a behavioural shift, about which Morgan Stanley stated, “Fund flows to US equities and bonds have ⁠overtaken the rest of the world since the Middle East conflict began last month, with investors looking to US assets as a more defensive market again.”

“In an oil supply shock, US Treasuries offer better diversification ‌as the country is less energy import-dependent than Europe,” ⁠the venture concluded.

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The new services (GULF SHUTTLE, REDEX, JADE, AE19 and SE4), launched in collaboration with major global shipping companies including MSC, CMA CGM, Maersk and Hapag-Lloyd, will operate across multiple maritime routes linking Saudi ports with key regional and international destinations, expanding connectivity and improving logistics performance.

According to Saudi Gazette, these services provide a combined capacity of approximately 63,594 twenty-foot equivalent units (TEUs), strengthening the operational capabilities of Saudi ports and offering greater flexibility for exporters and importers while supporting smoother trade flows.

The initiative will mitigate the impact of disruptions affecting vital maritime corridors, including the all-crucial Strait of Hormuz, while enhancing Red Sea connectivity, to improve overall supply chain efficiency.

Stating that all Saudi-based ports will be integrated with the action plan, Mawani further said the move is part of proactive efforts to enhance the maritime sector’s readiness by ensuring uninterrupted supply chains and strengthening the reliability of Saudi ports as key nodes in international trade.

Mawani will also provide integrated services for ships in the Eastern Region, including fuel, water, essential supplies, crew changes, and other operational requirements to keep the Gulf region’s maritime operations running.

As part of the initiative, the authority will also provide an updated list of approved ship suppliers and fuel service providers, enabling industry stakeholders to coordinate their needs directly and efficiently with these entities. Mawani has also kept its customer service and knowledge centre operational to proactively handle inquiries and facilitate requests.

The post Strait of Hormuz disruption: Saudi ports add new shipping services appeared first on International Finance.

While 21st century businesses have no other option but to take the volatile geopolitics into consideration while expanding their operations, the insurance sector faces the challenge of accurately assessing the possible outcome of damages and calculating appropriate premiums to charge.

As of 2026, war insurance remains an unknown quantity for insurance companies, with a high risk that a policy issued in this domain could lead to insolvency.

While industries like aviation and maritime trade still get specific war insurance options tailored to their needs, International Finance, using the ongoing Middle East conflict as a case study, examines how the broader War risk insurance industry has come under tremendous stress.

In Dire “Straits at Hormuz”

On February 28, 2026, the coalition of the US and Israel launched targeted air raids against Iran’s military and missile infrastructures, along with its decision-makers, repeating a similar act from 2025, killing the Western Asian nation’s Supreme Leader Ali Khamenei and many senior government and military officials.

Since then, Iran’s retaliatory missile and drone attacks across the Middle East have introduced chaos in the entire region. Apart from the American bases located in the region, energy production facilities are being attacked, while maritime trade through the Strait of Hormuz (one of the important shipping lanes) faces severe disruption.

While aviation and maritime trade are known for getting specific war insurance options, immediately after the conflict’s beginning, marine insurers started cancelling war risk coverage for vessels, as three tankers were damaged in the first week.

Through the Strait, oil equal to about one-fifth of global demand is moved by Saudi Arabia, the United Arab Emirates (UAE), Iraq, Iran, and Kuwait, with tankers hauling diesel, jet fuel, gasoline and other products. While maritime insurance majors, including Gard, Skuld, NorthStandard, the London P&I Club, and the American Club, excluded Iranian waters, Gulf and adjacent waters from their War risk insurance commitments, Skuld is reportedly working on a buy-back option to reinstate cover.

This move has led to a situation where the costs of shipping oil from the Middle East to Asia, already at six-year highs, could put the global energy trade under tremendous financial stress.

By March 13, the rates for a weekly coverage reportedly stood around ten times higher than before the beginning of the conflict, raising the transportation cost in the shipping corridor as well.

Nick Francis, Partner with Kennedys Legal Solutions in Singapore and Hong Kong, told International Finance that the coverage rise should be viewed using the parameter called additional war risks premiums (AWRP).

“AWRP, as the name suggests, is driven by risk. The risk in the Persian Gulf and surrounding areas has obviously escalated dramatically since the Iran conflict began. As a sidenote, while AWRP has exponentially increased, so have charter rates for these vessels – particularly tankers – so owners/operators are willing to pay the AWRP (which is usually passed on to charterers of vessels under charterparties in any event),” said Nick.

According to the marine journal Lloyd’s List, as of March 13, high-risk voyages were being quoted at approximately 7.5% of the ship’s value. This ratio may rise to 10% or more. Before the war onset, additional premiums (AP) for voyages through the Middle East Gulf (MEG) typically ranged from 0.15% to 0.25%.

The geopolitical developments in the last three to four years (including those in Ukraine and the Suez Canal) have made one thing clear: the choking of shipping lanes will be the new normal. In that case, will it add pressure to the WRI industry?

Nick, a leading shipping and international trade lawyer, told International Finance, “The insurance industry is built on an ability to price risk. I think the market is well steeled for the current conflict, given the recent experiences with the Black Sea/Sea of Azov following the Russian invasion of Ukraine, and the Houthi attacks in the Red Sea.”

Could the insurers have handled the Hormuz situation in a better manner?

Nick said, “The insurance industry is there to provide cover for various risks, which it does. It doesn’t create the risk.”

Shipping sector in a tight spot

Discussing risks, things are getting uncertain within the commercial marine industry itself, with a strong probability of hull rates rising. Dylan Mortimer, Vice-President of New York-based insurance player Marsh, told the Reinsurance News that there could be near-term rate increases for the Marine Hull line of businesses operating in the Gulf region by 25%-50%, with underwriters swiftly cancelling certain annual hull war policies under standard seven-day war clauses.

Stephen Rudman, head of marine for Asia at Aon, told Modern Diplomacy that the increase in hull war market rates should be seen as a quick response to the risk of significant losses if multiple vessels are attacked at the Strait of Hormuz. According to Rudman, there will be heightened underwriting scrutiny for voyages into or near sensitive (conflict) zones, including a potential requirement for prior approval.

Estimates by global investment giant Jefferies suggests that damages from seven reported vessels at the Strait (figures as of March 6) could lead to industry losses of up to USD 1.75 billion. Tankers valued at USD 200-USD $300 million could face new insurance rates of approximately 3%, translating to about USD 7.5 million in premiums, a significant rise from roughly USD 625,000 before the conflict.

Shedding further light upon the crisis, Nick noted, “When costs rise for the owner and operators of vessels, they will inevitably be priced into charter rates. Increased cargo premiums will obviously affect the landed value of goods – and will eventually be passed on to the end consumer.”

According to Sheila Cameron from the Lloyd’s Market Association, by March 6, about 1,000 vessels (mostly oil and gas tankers), with a total hull value exceeding USD 25 billion were in the Persian/Arabian Gulf region.

Stating that while most of these vessels are insured within the London market, she told Modern Diplomacy, “Reinsurers may respond to increased risks by adjusting the conditions under which their liability begins, potentially leaving main insurers with more risk and stress on their solvency levels.”

Also, the International Group of P&I Clubs has ceased coverage for vessels operating in and around Iran. Without it, shipowners will face open-ended liabilities, often halting voyages in high-risk areas. Industry reports reveal that such war-risk exclusions in the past led to reduced traffic and higher freight costs, and the same pattern can now re-emerge in the Persian Gulf as well.

According to London-headquartered GlobalData, reinsurers are repricing exposures across sectors such as marine, aviation and energy, while maintaining coverage continuity wherever possible. The conflict is affecting the sector through both direct exposure to loss events and indirect pressures, including higher reinsurance costs, capital flows, and inflation.

If anything, the changing geopolitics have taught the 21st century global socio-economic order that businesses need to engage with insurers to address disruptions and risks tied to war-like events, without any laxity.

Expressing confidence in the sector’s resilience, Nick concluded, “War is not new. War risk insurers have been recently dealing with the events in the Black Sea/Sea of Azov, involving missile strikes on vessels and, later, numerous constructive total losses (following a 12-month deprivation period), and missile attacks by Houthis in the Red Sea – so they are well- prepared to deal with the current events in the Persian Gulf.”

The post IF Insights: Choking of Strait of Hormuz tests limits of war risk insurance appeared first on International Finance.

“In the coming days, we may unsanction the Iranian oil that’s on the water. It’s about 140 million barrels. So, depending on how you count it, that’s 10 days to two weeks of supply,” the senior official told the country during Fox Business ‌Network’s “Mornings with Maria” programme.

According to Scott Bessent, the addition of sanctioned Iranian oil ‌into global ⁠supplies would help keep oil prices down for ⁠the next 10 to 14 days. Discussing oil prices, it has been above USD 100 per barrel for much of the past two weeks, with Iran closing the Strait of Hormuz and tankers carrying energy consignments getting attacked frequently.

The United States Treasury has already taken a similar step, by allowing the sale of sanctioned Russian oil stranded in tankers, which has reportedly added 130 million barrels to stretched global supplies.

Scott Bessent noted that the Trump administration ‌would take other actions to increase oil supply, including a unilateral release of stocks from the Strategic Petroleum Reserve above the recent coordinated joint G-7 release of 400 million ⁠barrels.

He said the Treasury would “absolutely not try to intervene in oil futures markets, but would take actions to increase physical supplies to try ‌to make up for the 10 million to 14 million barrel-per-day deficit caused by the closure of the Strait of Hormuz.”

“So, to be clear, we’re not intervening in the financial markets. We are supplying the physical markets,” the Treasury Secretary noted, while stating that China had become an “unreliable” supplier of refined products, as it has stopped exporting jet fuel and other products to other Asian countries.

Confirming the news, a Reuters report claimed that if the Trump administration eases sanctions on Iranian oil, one option would be a waiver similar to one used for Russian oil, allowing sales of crude already stranded at sea and confined to a narrow time frame.

“A potential waiver could accelerate the diversion of oil already destined for China into global markets more broadly, helping ensure adequate supply and blunting Iran’s leverage over the Strait of Hormuz,” a source familiar with the US Treasury’s planning told the media outlet.

Meanwhile, Trump lauded Japanese Prime Minister Sanae Takaichi during a White House meeting on March 19 for “really stepping up to the plate” ⁠on Iran. The Asian giant has joined European nations, in taking steps to stabilise energy markets, apart from ensuring safe passage for ships through the Strait of Hormuz.

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In fact, according to Saad al-Kaabi, Qatar’s energy minister, if the ongoing conflict forces Gulf energy producers to ⁠shut down exports within weeks, it could drive oil to USD 150 a barrel. In response to the US-Israel joint strikes on its territory, which were launched on February 28, Tehran has stopped the traffic of tankers moving through the Strait of Hormuz, which handles roughly one-fifth of global daily oil supply. The conflict has also resulted in the disruption of output, as refineries and liquefied natural gas (LNG) plants are facing shutdowns.

“Every day the Strait stays closed, prices will go higher. The belief in the market was that Donald Trump might pull back at some point because he doesn’t want to have high oil prices, but the longer that takes, the clearer it is how much is at risk,” said Giovanni Staunovo, commodity analyst at UBS, while interacting with Reuters.

As per a White House official, the Donald Trump administration will likely announce measures to combat rising energy prices from the conflict.

In fact, the Treasury granted waivers on March 5 for companies to buy sanctioned Russian oil stored on tankers to ease supply constraints that have resulted in Asia-based refineries cutting fuel processing. As per the ship-tracking firm Kpler, about ⁠30 million barrels of Russian oil are available and loaded on vessels in the Indian Ocean, Arabian Sea region and Singapore Strait, including volumes in floating storage.

Meanwhile, spot Middle East crude premiums have spiked to multi-year highs in the first week of March, a trend that also suggests higher costs for regional refiners, with the latter struggling to find immediate alternatives and facing potential output cuts, resulting in the global hike for crude prices.

Along with Brent crude futures and West Texas Intermediate, benchmark Dubai’s cash premium jumped to USD 19.63 per barrel, the reported highest from 2018. Premiums for Oman and Murban crude also soared, hitting USD 19.15 and USD 17.87 per barrel, respectively.

“Dubai spreads have surged as crude exports remain stranded within the Middle East Gulf, making price discovery nearly impossible. We expect Strait of Hormuz disruptions to continue through at least mid-March. There are concerns that Dubai price assessment will be nearly impossible once Oman- and Fujairah-loading Murban shipment volumes are exhausted this cycle,” said Richard Jones, a crude analyst at ⁠Energy Aspects, while interacting with Reuters.

The post Oil price stares at massive gain amid Middle East crisis appeared first on International Finance.

The Iranian Revolutionary Guard announced on March 5 that the choke-point would be under their control for the duration of the war. This makes any voyage through the narrow pass extremely risky.

IRGC Navy official Mohammad Akbarzadeh claimed, “Currently, the Strait of Hormuz is under the complete control of the Islamic Republic’s Navy,” warning ships risk missile or drone damage.

Major international container liners like Maersk, MSC, and CMA CGM are all halting operations effective immediately and navigating their vessels to safe contingency ports.

Among them, Danish shipping titan Maersk also halted cargo bookings from most Gulf markets after a war-driven risk assessment. The company confirmed that there shall be no more bookings accepted from Iraq, Qatar, UAE, Kuwait, Bahrain, and certain parts of Saudi Arabia and Oman “until further notice.” Maersk assured that there will be humanitarian exceptions that apply to food, medicine, and essential goods.

However, operations to Jordan and Lebanon will remain unaffected, and there are two Maersk vessels in the Gulf currently.

The 33-kilometre-long strait controls roughly 20% of all global crude oil shipments, as well as noteworthy volumes of liquefied natural gas.

Khaled Ramadan, a Cairo-based economist, said that oil and gas transit through the strait would fall by 80% with escalating tensions. Consequently, worldwide prices for oil and goods are expected to spike.

Maersk is not the only company wary of Gulf waters. German carrier Hapag-Lloyd also suspended shipments to and from the upper Gulf. Hapag-Lloyd said: The suspension is “a necessary response to current security conditions and regulatory restrictions,” as “safety of its crews, vessels, and cargo remains its highest priority.”

China’s COSCO cancelled bookings to multiple Gulf ports. Mediterranean Shipping Co. also declared an end of voyage for all Gulf-bound cargo, is diverting vessels to the nearest safe port, and is imposing a surcharge of $800 per container.

France’s CMA CGM prioritised the safety of its crew and vessel, and APM Terminals Bahrain also used emergency measures to divert its vessels and sailors to Khalifa bin Salman Port.

Inflammatory remarks by Iranians like Brig. Gen. Sardar Ebrahim Jabbari, who said that the “Strait of Hormuz is closed,” while vowing to “burn any ship that tries to pass”, is of great concern to insurers.

The insurance markets are reassessing their insurance premiums. It’s going to be an expensive affair to insure all the transport ships passing through the strait under such perilous conditions. Some prominent London insurers are still willing to offer coverage, but at extremely sharp premiums that are rising daily.

Marsh McLennan, an insurance broker, met with US officials to remedy maritime trade woes amidst the deepening crisis. Without de-escalation, global supply chains and energy markets will be consumed by inflationary chaos.

However, US officials have promised respite and intervention. US President Donald Trump claimed that the US Development Finance Corporation (DFC) will provide political risk insurance at a very reasonable price, and added, “If necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz.”

McLennan noted pre-conflict rates were 0.25%, now doubling as “insurers are cancelling pre-existing war risk policies and looking to renegotiate at higher prices.”

War-risk premiums could rise up to 50%, e.g., from $250,000 to $375,000 for a $100M vessel per voyage.

Experts say this could be part of Iran’s economic war. It doesn’t have to sink every ship that passes through the Strait of Hormuz. It just needs to make it unsafe enough to be uninsurable. Thereby driving up the costs of shipping and consequently the goods astronomically.

“Tanker traffic depends not just on whether ships can technically pass through Hormuz, but on whether operators can obtain war-risk coverage… Once coverage becomes uncertain or prohibitively expensive, trade slows faster than the formal status of the waterway changes. Insurance, in effect, becomes the market’s enforcement mechanism for geopolitical fear,” said Umud Shokri, energy strategist at Stimson Centre.

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