The surge in insurance costs for vessels passing through the Red Sea since early September is due to heightened risks of attacks by Yemen’s Houthis. This has led to insurers suspending coverage and increasing war risk premiums to as much as two percent of a ship’s value. Challenges for ships seeking coverage in the region are on the rise.
Insurance costs for ships passing through the Red Sea have surged after attacks by Yemen’s Houthis on tankers, sparking fears of environmental harm. The recent missile attack on the Greek-flagged vessel, Sounio, led to an oil leak and raised concerns about further incidents. War risk premiums have spiked, with insurers reassessing coverage in the region.
Feb 6 (Reuters) – Yemen’s Iran-aligned Houthis claimed to have fired missiles at two ships in the Red Sea, causing damage. The attacks have disrupted global shipping and raised fears of destabilizing the Middle East. The United States and Britain have retaliated by attacking Houthi targets in Yemen.
Oil and fuel tanker traffic in the Red Sea remained stable in December, despite attacks by Iran-allied Houthi fighters. The attacks have increased transportation costs and insurance premiums, but have had less impact on oil flows than feared as shippers continue to use the crucial east-west passage. Some companies have diverted their ships, while others continue to use the Red Sea route.
French shipping company CMA CGM confirms its plans to increase ships passing through the Suez Canal, in contrast to Maersk’s announcement to divert all ships to Red Sea routes. Shippers are avoiding the Red Sea due to increased attacks by Iran-backed Houthi fighters. Reuters © 2024.
