Insurance Costs for Ships in Strait of Hormuz Rise Over 60%

 The Strait of Hormuz is a key shipping chokepoint for crude oil (Reuters) 
 The Strait of Hormuz is a key shipping chokepoint for crude oil (Reuters) 
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Insurance Costs for Ships in Strait of Hormuz Rise Over 60%

 The Strait of Hormuz is a key shipping chokepoint for crude oil (Reuters) 
 The Strait of Hormuz is a key shipping chokepoint for crude oil (Reuters) 

Insurance prices for ships travelling through the Strait of Hormuz have jumped more than 60% since the start of the war between Israel and Iran as the conflict threatens shipping in a key chokepoint for crude oil, the Financial Times newspaper wrote on Wednesday.

As of this week, the cost of hull and machinery insurance for ships passing through the strait — a narrow waterway between Iran and Oman, connecting the Gulf to the Arabian Sea — as well as the wider Gulf area had risen from 0.125% of the value of the ship to about 0.2%, according to the world’s largest insurance broker Marsh McLennan.

This pushes the cost of cover for a $100 million ship from $125,000 to $200,000.

Hull and machinery insurance covers damage to the ship itself, as opposed to cargo or third-party liability.

“We’ve not yet seen a missile fired at a ship in the Arabian Gulf, so what it represents is the market saying, look, there’s definitely a heightened level of concern about the safety of shipping in the region,” Marcus Baker, global head of marine and cargo insurance at Marsh McLennan, told the Financial Times.

Prices could rise further, he added.

Ships trying to pass through the strait face a range of dangers, from electronic interference to attacks by the Iran-backed Houthi group and the threat of further escalation by Israel and Iran, said brokers and insurers.

On Monday there was a collision between two oil tankers near the Strait of Hormuz.

While the cause of the crash has not yet been publicized, one ship had transmitted atypical signals about its position, raising concerns about electronic interference.

Baker said insurers were also worried that Houthi militants could widen their attacks, damaging more ships than the US, UK and Israeli-flagged vessels they have generally been targeting.

The market is “concerned about every vessel” travelling through the area because of Houthi attacks, Baker said.

Some insurers could stop offering cover because of the risks, he added, but others might see any pullback as an opportunity.

“War itself, as an insurance product, tends to be...either you lose everything or make a fortune. And many fortunes have been made by underwriters prepared to take a risk,” he said.

Insurance rates for cargo, including oil, were also likely to rise because of the conflict, multiple brokers said, but had been slower to respond.

 

 



World Bank Forecasts 4.3% Growth for Saudi Economy, Supported by Non-Oil Activities

The Saudi flag. Asharq Al-Awsat
The Saudi flag. Asharq Al-Awsat
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World Bank Forecasts 4.3% Growth for Saudi Economy, Supported by Non-Oil Activities

The Saudi flag. Asharq Al-Awsat
The Saudi flag. Asharq Al-Awsat

The World Bank affirmed on Thursday that Saudi Arabia's economy has gained significant momentum for 2026-2027, driven by robust non-oil sector expansion under Vision 2030.

In a report titled “The Gulf’s Digital Transformation: A Powerful Engine for Economic Diversification,” the World Bank said growth is expected to persist in the Kingdom with non-oil activities expanding by 4% on average.

The report lifted its forecast for Saudi Arabia’s real GDP growth to 3.8% in 2025 compared to a 3.2% last October.

The forecast represents a major upward revision affirming the resilience of the Saudi economy and its ability to absorb external volatility. It also indicates growing confidence in the effectiveness of ongoing structural reforms within Vision 2030.

On Tuesday, Saudi Arabia approved its state budget for 2026, projecting real GDP growth of 4.6% in 2026.

The report showed that in the Kingdom, economic momentum is strengthening across oil and non-oil sectors with non-oil activities expanding by 4% on average and oil activities expanding by 5.4%, bringing overall real growth to an average of 4.3%.

It said oil activities grew by 1.7% y/y in the first half of 2025, benefiting from the phase-out of OPEC+ voluntary production cuts starting in April 2025.

At the financial level, the fiscal deficit between 2025 and 2027 is projected to remain at an average of 3.8% of GDP.

Meanwhile, the current account balance slightly recovered, settling at 0.5% of GDP in the first quarter of 2025 against -2.6% in the second half of 2024.

The report said real GDP growth remained stable at 3.6% y/y in the first half of 2025, thanks to the stabilization of the oil sector and sustained non-oil growth.

Non-oil activities expanded by 4.8% over the period, in line with the performance of 2024 while non-oil growth was driven by the wholesale, retail trade, restaurants, and hotels sector (+7.5% y/y in the first half of 2025), consolidating the role of hospitality and tourism as engines of economic diversification.

The report also indicated that oil activities grew by 1.7% y/y in the first half of 2025, benefiting from the phase-out of OPEC+ voluntary production cuts starting in April 2025.

These trends are expected to persist in 2026-2027, with non-oil activities expanding by 4% on average and oil activities expanding by 5.4%, bringing overall real growth to an average of 4.3%.

Job Market and Inflation
The report said the labor market mirrors the stabilization of the real economy and is rapidly becoming more inclusive to women.

Overall unemployment decreased by 0.7 point between the first quarter of 2024 and the first quarter of 2025, with the female unemployment rate dropping from 11.8% to 8.1% over the same period.

Also, inflation remained low and stable in Saudi Arabia, settling at an average of 2.2% in the first half of 2025.

However, price increases have been concentrated in the housing and utilities sector as rental prices have become a key issue, largely because rental supply has failed to match demographic growth, especially in Riyadh.

While this reflects the government’s efforts to dynamize the Kingdom’s urban centers, the price increases prompted the government to freeze rental prices in Riyadh for the next five years, as anticipated increases in housing supply should help control rental prices.

Finally, the report said Saudi Arabia’s external position stabilized in the second half of 2024 and the first quarter of 2025.

Although net foreign direct investment has remained relatively stable, the World Bank has emphasized that recent changes in foreign ownership regulations in Saudi Arabia, coupled with continued structural reforms, are positive steps to attract greater flows of foreign direct investment (FDI).


Visa Relocates European Headquarters to London's Canary Wharf

FILE PHOTO: A drone view of London's Canary Wharf financial district, two days before the government presents its critical pre-election budget, in London, Britain March 3, 2024. REUTERS/Yann Tessier/File Photo
FILE PHOTO: A drone view of London's Canary Wharf financial district, two days before the government presents its critical pre-election budget, in London, Britain March 3, 2024. REUTERS/Yann Tessier/File Photo
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Visa Relocates European Headquarters to London's Canary Wharf

FILE PHOTO: A drone view of London's Canary Wharf financial district, two days before the government presents its critical pre-election budget, in London, Britain March 3, 2024. REUTERS/Yann Tessier/File Photo
FILE PHOTO: A drone view of London's Canary Wharf financial district, two days before the government presents its critical pre-election budget, in London, Britain March 3, 2024. REUTERS/Yann Tessier/File Photo

Visa is relocating its European headquarters to London's Canary Wharf financial district, the Canary Wharf Group said on Friday.

The firm is leasing 300,000 square feet on a 15-year term at One Canada Square, and is set to relocate from Paddington in the summer of 2028, the group added.

Canary Wharf Group, which runs the wider financial district and is co-owned by QIA and Canada's Brookfield, was hit hard by the pandemic-induced fall in office demand.

The area is now enjoying a rebound as more firms push staff to return to office, Reuters reported.

"Canary Wharf continues to attract a diverse range of global businesses. We are delighted to welcome Visa who have chosen the Wharf for their European headquarters as the best location to support their business growth," Shobi Khan, Canary Wharf Group CEO, said.

JPMorgan Chase last week unveiled a plan to build a tower in the Canary Wharf financial district that will contribute 9.9 billion pounds ($13.2 billion) over six years to the local economy - including the cost of construction - and create 7,800 jobs.

Qatar's sovereign wealth fund is revising plans for a revamp of its HSBC skyscraper in the east London district to retain more office space, Reuters reported in November.


World Bank Raises GCC Growth Forecast

GCC leaders and their representatives attend the 46th Gulf Summit held in the Bahraini capital (BNA) 
GCC leaders and their representatives attend the 46th Gulf Summit held in the Bahraini capital (BNA) 
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World Bank Raises GCC Growth Forecast

GCC leaders and their representatives attend the 46th Gulf Summit held in the Bahraini capital (BNA) 
GCC leaders and their representatives attend the 46th Gulf Summit held in the Bahraini capital (BNA) 

The World Bank has lifted its growth forecast for the Gulf Council Cooperation (GCC) to 4.5% for 2026, supported by structural reforms and rapid digital innovation.

A WB forecast issued in October had projected 4.4% growth for 2026.

In its latest edition of the Gulf Economic Update (GEU), the World Bank said economic growth across the Gulf council is gaining momentum in 2025.

It said GCC countries are going through rapid structural transformation to diversify their economies away from oil, where jobs are at the heart of national vision.

The GCC countries are also in a unique position to attract and retain talent equipped with digital skills to build, operate and sustain the large digital infrastructure investments made in Digital Public Infrastructure, cloud computing, data centers and AI.

In Bahrain, the report said the country continues to show robust growth, driven primarily by its non-oil sectors, notably financial services and tourism.

Investments in infrastructure, gas, logistics, financial technology, and tourism are expected to sustain medium-term growth.

However, the report showed that fiscal pressures persist due to high deficits and elevated public debt while the economy is expected to expand by 3.5% in 2025.

Kuwait is emerging from two challenging years marked by regional instability, subdued oil prices, and OPEC+ production cuts, according to the WB report.

After consecutive GDP contractions in 2023 and 2024, the economy is showing signs of recovery, with positive growth expected in 2025 and beyond, supported by higher oil exports.

The recent passage of a financing and liquidity law enabling government debt issuance is a positive step toward easing fiscal pressures, the report said, adding that the economy is expected to expand by 2.7% in 2025.

Oman, the WB report said, has accelerated its diversification efforts, with non-hydrocarbon sectors increasingly driving growth.

The economy is expected to expand by 3.1% in 2025, with further acceleration anticipated in the medium term.

As for Qatar, it maintains a steady growth trajectory, underpinned by strong non-oil sector performance and robust external surpluses despite lower hydrocarbon prices.

As a global leader in liquified natural gas (LNG) production, Qatar is set to significantly boost output through the North Field expansion, reinforcing its position in global LNG markets.

Fiscal and current account surpluses are expected to remain strong, supported by LNG expansion as real GDP growth is projected to reach 2.8% in 2025.

Saudi Arabia is experiencing renewed economic momentum, with both oil and non-oil sectors contributing to growth. Real GDP growth is expected to reach 3.8% in 2025.

The report noted that fiscal pressures have intensified due to subdued oil prices, resulting in a widening deficit.

The country is leveraging its low debt levels to access global capital markets, with recent borrowing raising the debt-to-GDP ratio to close to 32%.

Ongoing reforms under Vision 2030 and changes in foreign ownership regulations are expected to further attract investment.

Also, the WB said, the UAE continues to sustain economic dynamism and diversification, with real GDP growth projected to reach 4.8% in 2025.

The Emirates stands out for its diversified economy, with balanced growth between non-oil and oil sectors, it said, adding that it is also leading in diversifying its export base.

Gulf and AI

The report showed that all GCC countries have robust telecom networks, with 5G coverage exceeding 90% and widespread fiber connections.

It said significant investments in data centers and high-performance computing (HPC) systems, especially in Saudi Arabia and UAE, underpin the region’s digital economy and AI readiness.

“Diversification and digital transformation are no longer optional. They are essential for long-term stability and prosperity. Strategic investments in non-oil sectors and innovation will be critical to sustaining growth and stability,” said Safaa El Tayeb El Kogali, World Bank Division Director for the Gulf Cooperation Council.

“The GCC’s digital leap is remarkable. With robust infrastructure and growing computer power, skills and competencies in Artificial intelligence (AI) capabilities, the region is well-placed to lead in innovation, provided we address labor and environmental challenges proactively,” she added.

The report also showed that women’s participation in the fields of Science, Technology, Engineering, and Mathematics (STEM) surpasses the global average, further reinforcing the region’s digital competitiveness.