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Why Hormuz is now the world's most expensive waterway for brokers (Exclusive Interview for Insurance Business Australia)

Press/Media: Expert Comment

Description

Interviewed as the article's principal authority on the repricing of marine war-risk insurance following the closure of the Strait of Hormuz. Argued that insurance has shifted from a background transaction cost to a genuine constraint on trade, tracing war-risk premiums on Middle East routes from a few hundred thousand dollars per voyage before the conflict to millions for a single Hormuz transit. Advanced the article's central thesis — that while hull cover represents the first pricing shock, cargo insurance is where loss severity, claims volatility and systemic risk concentrate, given that a single VLCC cargo can exceed $250 million in value and dwarf the hull claim. Also supplied charter rate estimates showing LNG tanker day rates rising from a pre-conflict $150,000–$200,000 to approximately half a million US dollars, and identified US-origin diesel arriving on very large crude carriers as the element currently holding Australian fuel supply together.

Subject

Marine war-risk and cargo insurance pricing in the Strait of Hormuz; charter rate escalation and its transmission to Australian fuel supply costs.

Period21 Apr 2026

Media contributions

1

Media contributions

  • TitleWhy Hormuz is now the world's most expensive waterway for brokers (Insurance Business Australia)
    Degree of recognitionNational
    Media name/outletInsurance Business Australia
    Media typeWeb
    Duration/Length/Size4 min read
    Country/TerritoryAustralia
    Date21/04/26
    DescriptionThis article examines the repricing of marine war-risk insurance following the closure of the Strait of Hormuz, drawing throughout on analysis by Dr Lurion De Mello. He argues that insurance has moved from a background cost to a binding constraint on trade, with premiums on Middle East routes rising from a few hundred thousand dollars per voyage before the conflict to millions for a single transit, and identifies cargo rather than hull cover as the market's principal stress point: hull represents the first pricing shock, but cargo drives loss severity, claims volatility and systemic exposure, since a single very large crude carrier may hold two million barrels worth in excess of $250 million. He further estimates that LNG tanker charter rates have risen to approximately half a million US dollars per day against a pre-conflict norm of $150,000 to $200,000, with each additional day at sea — whether rerouting via the Cape of Good Hope or idling in the Gulf — compounding war-risk exposure, demurrage and delay-in-start-up claims. Connecting this to Australian supply, he identifies very large crude carriers delivering US-origin diesel as the factor preventing serious shortfall, noting that the cargo cover required for each shipment feeds directly into terminal gate and pump prices. The piece situates the analysis against the Joint War Committee's extension of high-risk designation across the Persian Gulf, quotes landing between 1 and 5 per cent of hull value with outliers near 10, roughly 1,900 vessels stranded around the strait, and Howden's estimate of $15.3 billion in oil and gas aboard Gulf-bound tankers.
    Producer/AuthorDaniel Wood
    URLhttps://www.insurancebusinessmag.com/au/news/marine/why-hormuz-is-now-the-worlds-most-expensive-waterway-for-brokers-572275.aspx
    PersonsLurion De Mello
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