Shipping insurance premiums for Strait of Hormuz transit continued their climb Monday, with war-risk coverage now exceeding 1% of vessel value for most underwriters — a fivefold increase from the 0.2% rate that prevailed before the conflict began [1].

For a $100 million oil tanker, that translates to more than $1 million per voyage in insurance costs alone. Many shipowners have concluded the math no longer works. Vessel traffic through the strait has dropped 70% from pre-war levels, according to Nexta TV reporting, even without an official Iranian closure order.

The insurance market, not the military, effectively closed Hormuz. As shipping analyst Shanaka Anslem noted, "Seven insurance companies filed paperwork. The Strait of Hormuz closed. Not because Iran mined the channel" but because Lloyd's-linked underwriters refused to write war-risk policies at any viable price.

Monday's developments will accelerate the trend. Trump's comments about seizing Kharg Island introduce direct confrontation risk for any vessel in the Persian Gulf, and Spain's airspace closure to U.S. military aircraft suggests NATO coordination on naval operations could fracture — raising questions about escort reliability.

Insurance costs for tanker attacks are cumulative. Each incident ratchets the baseline premium higher, and premiums almost never fall back to pre-incident levels during active hostilities. The cost is passed through to crude buyers, then to refiners, then to consumers. It is one of the mechanisms through which war becomes inflation.

Tanker operators are rerouting around the Cape of Good Hope, adding 10 to 14 days per voyage and further tightening effective supply.

-- DARA OSEI, London