Bloomberg London/New York
Oil tanker owners face spiralling insurance costs to load cargoes from the world’s largest crude-export region after the latest round of attacks on vessels.
War risk premiums that owners pay each time they go to the Gulf have now surged to at least $185,000 for supertankers, according to people with knowledge of the market. They rose to $50,000 after the attacks a month ago.
Both owners and the companies that charter their ships paused bookings in the immediate aftermath of attacks last Thursday as they re-evaluated risks to shipping barrels from the Middle East in the wake of attacks on two more tankers just a month after similar incidents. Insurance costs from the Gulf are soaring.
The US pointed the finger at Iran for the attacks just outside the Strait of Hormuz, a vital corridor for crude oil exports. Iran immediately denied being responsible.
Regardless, six tankers, hauling a variety of petroleum cargoes, have now been targeted in the space of just 32 days - the kind of threat to merchant shipping that hasn’t been seen in the region for decades.
“We need to remember that some 30% of the world’s crude oil passes through the Straits,” said Paolo d’Amico, chairman of Intertanko, the biggest trade group for tanker owners. “If the waters are becoming unsafe, the supply to the entire Western world could be at risk.”
The Joint War Committee, a group that advises insurers, designated the entire Gulf and waters just outside it a so-called Listed Area after the incidents a month ago. The classification gives underwriters room to charge more.
DNK, the mutual insurer that covered one of the ships damaged on Thursday, will increase its rates for war insurance, according to a person familiar with the matter. Rival insurer Hellenic War Risks Club will probably increase a so-called additional premium that owners pay when sailing to the Gulf with immediate effect, according to a notice on its website.
DNK insured the Norwegian-owned Front Altair for the full value of the vessel, according to the person familiar with the matter. A ship of that tanker’s size is worth between $30mn and $50mn, according to another person with knowledge of the matter. Insurers provide war policies that pay out the value of ships damaged or destroyed by acts of both terrorism and war. The Front Altair’s cargo of naphtha would be insured under a separate policy.
The vessel is being towed away from Iranian waters, and the company’s owner is considering transferring the naphtha to another ship.
Some owners appear to be “taking a breather” when it comes to accepting charters from the Middle East while they evaluate the risks of lifting oil from the region, according to Halvor Ellefsen, a shipbroker at Fearnleys in London.
Shipping companies should consider diverting vessels from the area where the two vessels were attacked on Thursday, industry group BIMCO, the largest international shipping association for owners, said in a security advisory to its members. Tensions in the Strait and the Gulf are now at the highest they can be without an actual armed conflict, the group said in a separate statement.
LEAVE A COMMENT Your email address will not be published. Required fields are marked*
Tech to help banks ‘survive and prosper,’ says Abraham
QNB banks on its capital strength to grow balance sheet in ‘controlled’ way
Qatar Chamber to host seminar on private sector role in strategic storage
Qatar Chamber reviews ties with Istanbul metal exporters’ group
Oil rises as Opec and its allies agree to deepen output cuts
Ethics and culture paramount in banking
US Fed to hold fire as economy ends 2019 on a strong note
Qatari-Turkish partnership an inspiring model of bilateral alliances, says al-Kuwari