Elevated war-risk insurance premiums in the Strait of Hormuz are weighing more heavily on oil products tankers than on crude carriers, according to analysis from ship brokerage BRS. The disparity stems from a comparatively modest wartime freight rate uplift in the clean products segment, which leaves operators of these vessels with a less favourable cost-to-earnings ratio when weighing a Hormuz transit decision.
The Insurance Cost Burden
Since the outbreak of hostilities in the region, additional war-risk premiums have settled at approximately 10% of hull value for vessels transiting the Strait of Hormuz. For operators already navigating tight margins, this represents a significant operational cost that must be weighed against the potential freight income from any given voyage. The core issue, as BRS analysts highlight, is not that the absolute insurance cost differs between vessel types — it is that the freight rate environment in the clean tanker market has not risen sufficiently to absorb that cost in the same way crude tanker earnings have.
Crude carriers have benefited from a more pronounced wartime boost to freight rates, which has helped offset the additional P&I Club and war-risk insurance expenditure associated with high-risk zone transits. Product tankers, by contrast, have seen a comparatively smaller uplift in earnings, meaning the same 10% hull value premium consumes a proportionally larger share of voyage revenue for clean tanker operators.
Operational and Commercial Implications
The financial calculus for product tanker operators considering Hormuz transits is therefore materially different from that facing their crude counterparts. When war-risk premiums are stacked against freight earnings, the net voyage result for a clean tanker may prove unattractive or even unviable, deterring operators from committing tonnage to routes through the strait.
This dynamic has practical consequences for regional energy supply chains. Oil products — including refined fuels, naphtha, and petrochemical feedstocks — move through the Strait of Hormuz in significant volumes, and any sustained reluctance among product tanker operators to accept such voyages can tighten regional supply, redirect tonnage, and ultimately influence spot rate levels in adjacent trading areas. Operators and commercial managers should factor this insurance-driven deterrence into their voyage planning and fixture assessments, particularly when evaluating whether period or spot employment on Hormuz-exposed routes remains commercially sound.
From a risk management perspective, the distinction between war-risk hull insurance and port state control compliance obligations is worth noting for operators deploying vessels in or near declared war-risk zones. Crew safety protocols, emergency response planning, and communication with war-risk underwriters must all be maintained to the highest standard regardless of vessel type, but the commercial case for absorbing these costs differs markedly depending on the market segment.
Broader Market Context
The BRS analysis reflects a broader pattern observed in conflict-affected shipping corridors, where war-risk premium levels are applied relatively uniformly across vessel classes, but the freight rate response is rarely uniform. Crude tanker markets have historically demonstrated a sharper and faster reaction to geopolitical disruption, partly due to the scale of individual cargo values and the strategic importance of crude flows to major importing nations. Product tanker markets, while also sensitive to disruption, tend to reflect a more diffuse set of trading routes and cargo origins, which can dampen the rate spike effect.
For bulk carrier operators and those with interests across multiple vessel classes, the BRS findings serve as a useful reminder that war-risk cost exposure is not simply a function of the premium percentage — it must always be assessed relative to prevailing freight earnings in the specific market segment. A cost that is manageable in a strong rate environment can become prohibitive when rates soften, irrespective of whether the underlying geopolitical risk has changed.
Operators with vessels trading in or around the Persian Gulf and Strait of Hormuz should ensure their war-risk cover is current and appropriately structured, maintain close dialogue with their insurance brokers and underwriters regarding any changes to listed areas or premium adjustments, and continuously reassess voyage economics as both the security situation and freight markets evolve. Proactive engagement with risk advisors remains essential in navigating this complex and fluid operating environment.