Red Sea Ship Insurance Costs Surge Amid Houthi Attacks and Oil Spill Threats

Insurance costs for ships passing through the Red Sea have spiked following attacks by Yemen’s Houthis on tankers. The attacks have raised concerns about environmental damage along the trade route. In a recent incident, the Greek-flagged vessel, Sounio, was attacked with missiles causing an oil leak. The Pentagon reported that the Houthis threatened to attack salvage boats sent to help the tanker, leading to heightened risk levels and increased war risk premiums for ships transiting the area.

The rise in insurance premiums post-attack has added significant costs for ships passing through the region, with Chinese-owned vessels experiencing slightly lower rates due to decreased raid risks. Some insurers have even stopped providing coverage for the region, citing the potential risk of further incidents. European Union officials are assessing protective measures, including towing the Sounio, to prevent an environmental catastrophe from the spillage of one million barrels of crude oil.

The Houthis targeted the tanker due to alleged violations by its owner, Delta Tankers, and have stated their intention to sink the ship to prevent pollution. The crew has been evacuated, but the risk of the ship sinking remains high. A major spill could devastate Yemen’s Red Sea coast, impacting half a million Yemeni workers in fishing communities. The United Nations has warned of the severe consequences of such an event, highlighting the urgent need to prevent further environmental damage in the region.

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