Hormuz War-Risk Insurance Premium: What 0.25% Really Costs a Tanker
Since the April 28, 2026 Joint War Committee listing of the Persian Gulf, the war-risk insurance premium on tanker hulls transiting the Strait of Hormuz jumped from 0.07% to 0.25% of the hull's insured value — and briefly 0.31% after the May 14–15 IRGC clash.
This article translates basis points into dollars, and explains who actually pays.
The math, on a single VLCC voyage
Take a typical VLCC insured at $110 million carrying 2.0 million barrels of Arab Light from Ras Tanura to Ningbo:
| Premium rate | Per-transit cost | Cents/bbl | $/bbl |
|---|---|---|---|
| 0.07% | $77,000 | 3.85¢ | $0.039 |
| 0.25% | $275,000 | 13.75¢ | $0.138 |
| 0.31% | $341,000 | 17.05¢ | $0.171 |
| 0.50% | $550,000 | 27.50¢ | $0.275 |
| 1.00% | $1,100,000 | 55.00¢ | $0.550 |
So the move from "calm" to today's 0.25% rate adds ~10¢ per barrel to landed crude — small per barrel, but $200,000+ per voyage, every voyage.
Who actually pays
- Charterer in a spot voyage (CFR / DAP terms) — most common in May 2026.
- Owner under a long-term Time Charter Party without a war-risk clause (rare today; most TCPs have a Joint War Committee re-rating clause).
- End buyer if the cargo is sold on a delivered basis (Asian refiners are eating most of it).
When does insurance refuse the risk entirely?
- War-risk premium above 1.0% historically precedes mass non-renewal.
- The Joint War Committee can issue a "Listed Area Notice" that removes Hormuz from default cover — owners then need individual London market underwriting.
- After the 2019 Fujairah and Gulf of Oman attacks, premiums hit 0.40% for ~3 weeks before settling back.
What about Iranian / dark-fleet tankers?
They self-insure or use Russian / Iranian P&I clubs (RPNK, Kish P&I). Premium opacity is one reason these vessels go dark on AIS — underwriters can't bill what they can't see.
Forecast for the rest of 2026
- Base case (55%): premium settles at 0.25%, adds $0.10–$0.14/bbl.
- Bull case (30%): premium spikes to 0.60%, mass non-renewal for non-OECD flagged tonnage.
- Bear case (15%): quick de-escalation, premium reverts to 0.10% by July.
Combine this with the oil price forecast for a complete crisis-cost picture.
What to monitor
- Lloyd's List Joint War Committee monthly bulletin.
- Norwegian Hull Club war-risk pricing index (public weekly summary).
- Premium / Brent ratio in the inflation dashboard.
Sources: Lloyd's List Intelligence · Joint War Committee Listed Areas (April 2026 update) · Norwegian Hull Club weekly war-risk index · IUMI 2025 statistics yearbook.
FAQ
How much does the current 0.25% war-risk premium add per barrel? About $0.14/bbl on a typical VLCC voyage — small per barrel but ~$275,000 per voyage.
Who pays the war-risk premium — owner or charterer? In spot voyages (majority in May 2026), the charterer pays. Time-charter parties usually re-rate via a Joint War Committee clause.
At what premium level do insurers refuse to cover? Historically, sustained rates above 1.0% precede mass non-renewal. The Joint War Committee can also issue a Listed Area Notice forcing individual London underwriting.
Do Iranian-flagged tankers buy this insurance? No — they self-insure or use Russian/Iranian P&I clubs, which is one reason these vessels routinely switch off AIS.
Methodology & sources
Premium math uses standard Lloyd's per-voyage formulas; rate observations come from Joint War Committee and Norwegian Hull Club weekly bulletins. Last reviewed 2026-05-16.