A single large tanker now pays up to ten million dollars in war-risk insurance to cross the Strait of Hormuz, a bill unthinkable before February. Marine underwriters have pushed premiums to between 3% and 10% of hull value, up from around 0.25% before hostilities began.
President Donald Trump declared the ceasefire between Washington and Tehran “over” at the North Atlantic Treaty Organization summit in July, and shipowners have paid the price ever since.
The United States and Iran had signed an Islamabad memorandum of understanding in June, and the truce rested on that accord. The agreement opened a sixty-day window for talks on navigation rights, Tehran’s nuclear programme and sanctions relief.
The truce lasted under three weeks. Iranian strikes on commercial vessels, including two United Arab Emirates tankers, prompted Washington to hit roughly ninety military sites inside Iran. Tehran answered with missiles against American positions across the Gulf.
Energy markets tied to one narrow passage keep dragging the continent back into a war Europe did not start and cannot end. European states, watching from a distance, confirm that link with every renewed spike in shipping premiums.
Truce Undone Within Weeks
European governments had allowed themselves brief relief once the Islamabad accord took hold, as premiums eased from peak levels and traffic through Hormuz edged upward. That relief proved short-lived.
Lloyd’s List Intelligence reported no large vessels had crossed the Omani coastal corridor with transponders switched on since early July. Brokers describe premiums as quick to climb and slow to ease, a habit already familiar from the Red Sea and Black Sea corridors. Underwriters now say confidence will not return until incident-free transits accumulate over many months, not days.
Europe Pays Distant Bill
Only a small share of European crude and gas originates directly in the Gulf, and global pricing still leaves the continent exposed regardless of geography. Dutch benchmark gas climbed again after the ceasefire collapse, trading well above pre-war levels.
European storage sat near forty-six billion cubic metres in late February, far below the seventy-seven billion recorded two years earlier, leaving utilities racing to refill tanks ahead of winter. Households and industry absorb these swings through bills and manufacturing margins, long after the ships involved have sailed elsewhere.
Brussels can already count the toll in solid totals. European Commission President Ursula von der Leyen said the bloc spent twenty-five billion euros extra on oil and gas imports in the opening fifty-four days of the war.
Motorists across France, Italy and Poland absorbed higher pump prices. Registrations of electric vehicles across European markets jumped by half in a single month, an unplanned consumer response coming well ahead of any coordinated policy. Higher energy costs, once temporary, now look woven into household budgets for the medium term.
Building Routes Around the Strait
Officials in Paris and Brussels increasingly agree that dependence on a single corridor cannot persist unaddressed. The IMEC has gained renewed political backing. Saudi Arabia’s East-West pipeline now runs near full capacity, carrying crude to the Red Sea and bypassing Hormuz entirely.
Some European governments reportedly now accept that ships may eventually pay transit fees to Iran and Oman, according to people familiar with internal talks. Such an outcome would once have seemed unthinkable in Brussels.
Gulf producers have generally kept exports flowing through other pipelines and ports even as the strait itself turned unreliable. The rerouting has cushioned the worst of the shortfall for buyers willing to pay a premium. Saudi Arabia and the United Arab Emirates have absorbed considerable diplomatic and commercial pressure without becoming parties to the fighting themselves, a distinction increasingly evident in commodity markets.
Across the wider Gulf, governments have been sourcing weapons away from single foreign patrons as Iran’s war stretches into a fifth month. The trend echoes Europe’s own search for routes around Hormuz. European buyers, competing with Asian counterparts for the same limited liquefied natural gas cargoes, remain the ones bearing the sharper end of the pricing squeeze.
Road Ahead for Brussels
None of these routes will replace Hormuz soon; pipelines carry a fraction of the volume the strait once handled daily, and new liquefaction capacity takes years to build. The European Commission’s own economic modelling assumes disrupted transit persisting into September.
Should hostilities drag on, oil could climb toward one hundred and eighty dollars a barrel and gas above eighty euros. Even a durable settlement between Washington and Tehran would not lower insurance premiums quickly, since underwriters price risk against months of claims history and not against diplomatic announcements.
Keep up with Daily Euro Times for more updates
Read also:
Abu Dhabi Wants Insurance, Not a Bailout
Gulf Airlines Sell Reassurance as Their Core Summer Product
Piracy Around the Horn of Africa is Going Global
