Multiple syndicates at Lloyd's of London suspended the quoting of new war-risk insurance policies for tankers transiting the Persian Gulf and Strait of Hormuz on Thursday, according to three brokers familiar with the decision — a move that could effectively freeze a significant share of regional crude exports within 72 hours.
The suspension came hours after a U.S. Navy destroyer shot down an Iranian drone in the central Persian Gulf. Existing policies remain in effect, but tankers arriving without pre-arranged coverage — a common practice in the spot market — will be unable to load crude at Gulf terminals.
"The underwriters are pressing pause until they can assess whether this was an isolated incident or the start of a broader exchange of fire," said one London-based marine insurance broker who requested anonymity to discuss client matters. "Nobody wants to be holding risk on a VLCC when the shooting starts."
A Very Large Crude Carrier carries roughly 2 million barrels of oil valued at approximately $240 million at current Brent prices. War-risk premiums for Gulf transits had already tripled to roughly 0.3% of hull value — roughly $450,000 per voyage for a modern tanker — before the drone incident. Brokers said quotes have now effectively disappeared from the market.
The International Association of Independent Tanker Owners, known as Intertanko, issued an advisory to members recommending that vessels in the Gulf of Oman maintain a minimum distance of 100 nautical miles from Iranian territorial waters and transit only during daylight hours.
"The insurance market is telling you what the diplomats won't," said Nadia Petrov, chief commodities strategist at Barclays. "The Gulf is now a war zone for commercial shipping purposes. That has enormous consequences for energy markets."