Tanker owners face insurance headache as Mideast war risk haunts shipping trade - Reuters

Tanker owners face insurance headache as Mideast war risk haunts shipping trade - Reuters:

Even as the United States and Iran appear to signal a keenness to avoid further conflict, oil and gas shipowners are bracing to pay a price for the war of words that culminated in rocket strikes in Iraq over the last week - higher insurance bills.

According to industry sources, payments known as war risk premiums for tankers shuttling through the Strait of Hormuz could rise significantly, adding hundreds of thousands of dollars to shipping costs in some cases that will ultimately be passed on to fuel buyers - mostly in Asia.

About 20% of the world’s crude oil supply and a quarter of the global supply of liquefied natural gas (LNG) are transported on tankers through the Strait of Hormuz, a narrow passage between the Gulf and the Indian Ocean. Saudi Arabia is the world’s biggest crude oil exporter, while Qatar is the top LNG exporter.

“We are obviously concerned with regard to the tension around the wider (Gulf) area,” said Svein A Ringbakken, managing director of Norwegian ship insurer Den Norske Krigsforsikring for Skib (DNK) told Reuters. “Ships’ transits in these areas have already for some time been subject to additional war risks insurance premiums which may increase in light of the recent developments.”