As military tensions flare in the Strait of Hormuz, another battle is unfolding behind the scenes, one no less dangerous. Insurance companies have emerged as key players shaping the fate of global shipping.
With premiums surging to unprecedented levels, experts told Asharq Al-Awsat the world is approaching a “moment of truth.”
The closure of the waterway threatens not only oil flows, but also bread supplies in the world’s poorest countries, while putting the international legal framework that protects trade at risk of collapse.
War risk insurance premiums in the Strait have jumped to between 1% and 7.5% of vessel value, up from less than 1% before attacks escalated. In practical terms, insurance for a single voyage of a large oil tanker worth $100 million can now range between $2 million and $9 million, compared with about $250,000 before tensions intensified.
Rabih El-Amine, head of the Lebanese Executives Council, said the Strait of Hormuz is no longer just a narrow maritime passage, about 21 miles wide, but “it has become the single lung through which the global economy breathes.”
“When that lung is threatened, it is not only oil that suffocates, but food, medicine, and hope as well,” he told Asharq Al-Awsat.
He added that the situation is alarming, not just on a theoretical level, but because its consequences are already affecting companies and markets, with marine insurance premiums rising by 30% to 120% in a matter of months.
When major insurers withdraw entirely from covering vessels forced to transit the Strait, it signals not only higher costs, but a breakdown in the entire system of commercial trust, he warned.
Numbers tell the story
El-Amine said more than 230 loaded oil tankers are currently waiting for clearance to pass through the Strait and are unable to depart.
The International Energy Agency has described the situation as the largest disruption to oil supply in the global market's history. Natural gas prices in Europe have surged by more than 70%, while jet fuel prices have climbed 95%, forcing some European airports to ration fuel.
Some estimates suggest oil could approach $200 per barrel if the closure persists.
Yet El-Amine warned that wheat and fertilizers are an even greater concern. The Gulf region is not only a global energy hub, but also a key supplier for global agriculture, with 35% of global urea exports passing through the Strait.
India imports 70% of its needs from the region. Urea prices have jumped 26% to $585 per ton, a level not seen in years.
“When fertilizer prices rise, bread prices follow,” he said. “The heaviest burden is not borne by European or American farmers, but by poor families in Africa and South Asia, where an estimated 45 million people are now on the brink of acute food insecurity.”
He added that geopolitical crises carry costs that are unevenly distributed, as negotiators debate strategic interests behind closed doors while poorer nations face soaring commodity prices.
He stressed the need for insurers, companies, and governments to shift from crisis response to disaster prevention, calling for a flexible regional insurance system, emergency financing mechanisms, and dialogue channels that prioritize food and energy security over other considerations.
Testing the legitimacy of the international system
Saeed Salam, director of the Vision Center for Strategic Studies, said the current crisis in the strait has evolved beyond a military confrontation into a test of the legitimacy of the international system.
“The precise calculations of global insurance companies have become the real driver of trade flows, outweighing international laws and agreements,” he told Asharq Al-Awsat.
According to Salam, the escalation that began in late February, followed by Iran’s closure of the strait and attacks on 19 to 20 commercial vessels that did not comply with its transit conditions, has created a state of comprehensive “economic shutdown.”
Insurance costs have risen sharply due to unprecedented risks, making navigation through Hormuz commercially unviable.
Tankers have been forced to seek longer, more expensive alternative routes, while major powers and international actors attempt to secure supply flows through exceptional interventions that have so far failed to restore confidence.
Salam said this reality undermines the maritime legal system established in 1982, exposing a wide gap between the legal right of transit passage and the threats imposed by Tehran, which he said is attempting to reshape the rules of engagement in the region.
He added that the involvement of major powers in providing government guarantees to vessels further complicates the situation, giving commercial shipping a direct political dimension and turning ships into targets in conflicts they have no stake in.
This, he warned, could fragment the global maritime system into competing spheres of influence governed by power and coercion rather than freedom of trade.
At the same time, competition among global powers has extended into the insurance and technological domains.
While Western systems attempt to manage risk at high cost, China has begun offering parallel guarantees for vessels linked to it, potentially dividing the world into rival insurance blocs aligned with geopolitical agendas.
Salam pointed to cyber threats as the most dangerous emerging front. Maritime mines are no longer the only concern, he said, as digital systems that manage ports and control vessels have become vulnerable to disruptions that can halt global supply chains within moments, risks not covered by traditional insurance contracts.
Salam said the failure of the Islamabad talks signals a prolonged period of uncertainty. Companies will need to move beyond financial hedging and adopt hybrid strategies that combine insurance, cybersecurity, and strategic alliances to navigate these risks.
“The era of safe, internationally guaranteed navigation is over,” he said. “The world is entering a new reality where threat itself becomes the governing rule in the Strait.”
He added that companies that survive will be those with high flexibility and the ability to anticipate risks, while passive waiting is a gamble that could push the global system into inevitable stagflation, at a time when securing trade routes has become the only benchmark for sustaining production and growth.
