Lead
As the U.S.-Iran war approaches the one-month mark, the Strait of Hormuz — a chokepoint that normally carries around one-fifth of the world’s oil — has seen daily transits fall roughly 90% to 95%, trapping hundreds of tankers in the Persian Gulf. A surge in drone and missile strikes and sharply higher marine insurance have combined to halt normal shipping; Brent was trading near $113 a barrel as of Friday, up more than 50% from prewar levels. Shipping and insurance experts say oil flows are unlikely to return to normal until either a clear ceasefire is in place or Iran’s ability to strike ships is substantially degraded. In short, commercial operators want safety guarantees for vessels and crews before they risk transiting the strait at scale.
Key takeaways
- Daily transits through the Strait of Hormuz have dropped about 90% to 95% since the conflict began, according to shipping intelligence firm Kpler.
- Specialized war-risk insurance for vessels transiting the strait now ranges roughly 3.5% to 10% of a vessel’s value, up from 1% to 2% in the war’s first week and a fraction of a percent before the conflict, per McGill & Partners.
- About 130 crude and fuel-oil tankers and roughly 210 product tankers are currently anchored in the Persian Gulf, according to Vortexa’s Rohit Rathod.
- Brent crude traded near $113 per barrel as of Friday, more than 50% above prewar levels; U.S. gasoline prices and Asian supply worries have risen accordingly.
- Analysts and insurers say insurance price declines alone won’t restore traffic; a ceasefire or clear, sustained degradation of Iran’s strike capability is the primary enabler.
- Proposed measures such as U.S.-backed insurance guarantees or naval escorts could help, but officials and market participants caution they are unlikely to restore full flows until risk perceptions fall materially.
Background
The Strait of Hormuz is a narrow maritime corridor between Iran and the Arabian Peninsula that channels roughly 20% of global oil shipments in normal times. Since the conflict began, Tehran has repeatedly warned it may target vessels that transit without its permission, and more than a dozen Iranian drone and missile strikes on ships in and near the strait have been reported. Shipping companies promptly reacted by rerouting, delaying sailings, or idling vessels in port, producing an unprecedented congestion of tankers in the Persian Gulf.
Marine war-risk insurance is typically purchased for operations in high-risk waters and covers damage to hulls, cargo and pollution liabilities. Those premiums are highly sensitive to perceived threats; they rose sharply as attacks escalated. National governments and international insurers are considering measures to backstop or subsidize coverage, but operators emphasize that financial cover does not substitute for crew safety or confidence that a route is physically secure.
Main event
Since the onset of hostilities, Iran has threatened to strike ships that move through the Strait without its assent; the country has also signaled selective safe passage for vessels from some friendly states. Kpler reports a collapse in traffic through the strait, leaving hundreds of tankers loitering in the Persian Gulf. Insurers and brokers describe a market in which premiums have spiked and underwriters are charging rates that reflect the heightened risk environment.
Industry sources tell CBS News that insurance for a vessel sailing through the strait now commonly costs several percentage points of the ship’s value—figures that were negligible before the war. Yet multiple shipping experts stress that the primary deterrent to transit is not the premium itself but the danger to crews and assets if missiles or drones strike. Commercial owners are unwilling to expose seafarers to direct attack risks even where insurance is available.
U.S. administration officials have discussed options including government-backed insurance financing and the possibility of naval escorts to reassure insurers and shippers. Officials described plans to partner private insurers with government guarantee mechanisms, but they also acknowledged logistical and political hurdles. Some proponents say escorts could be persuasive once hostilities subside; critics argue a convoy in the middle of active attacks could escalate risk rather than reduce it.
Analysis & implications
Restoring oil flows through the Strait of Hormuz is a three-part problem: security, insurance pricing and production. Security requires either a durable ceasefire or a demonstrable and lasting decline in Iran’s capacity or will to strike ships. Insurance pricing will follow but lag behind security improvements because underwriters need sustained evidence of safe passage before materially cutting rates.
Even after maritime traffic resumes, supply-side constraints will slow the recovery of exports. Many Gulf producers have curtailed output during the crisis; wells and production infrastructure cannot be restarted instantly and may need weeks to months to return to prior levels. Analysts estimate that if a ceasefire were achieved by April or May, exports might approach prior rates by roughly July, but that timeline depends on both shipping confidence and producers’ willingness to re-open fields.
Political factors complicate recovery. Iran’s leverage over the strait means any easing of transit restrictions is likely to be conditional and potentially partial. Some states may secure preferential movement, but broad restoration of traffic requires credible, verifiable guarantees accepted by both regional actors and international insurers. Without those guarantees, a slow, phased return of vessels — starting with risk-tolerant operators and expanding if transits prove safe — is the most likely scenario.
Comparison & data
| Metric | Pre-conflict | Early war (week 1) | Current (near one month) |
|---|---|---|---|
| Daily transits (approx.) | Normal baseline | Declined moderately | Down ~90% to 95% (Kpler) |
| War-risk insurance (% of vessel value) | Fraction of 1% | 1% – 2% | ~3.5% – 10% (McGill & Partners) |
| Tankers in Persian Gulf | Lower than current | Rising | ~130 crude/fuel + ~210 refined product (Vortexa) |
| Brent crude | ~50% lower than current | Rising | ~$113 per barrel (as of Friday) |
The table above highlights how risk and volume metrics have diverged since the conflict began. Insurance rates and physical congestion have moved first; prices responded immediately in financial markets. Historical precedents (for example, escort operations during the late Iran-Iraq War) show that military protection can enable transit, but modern threats—notably drones and ballistic missiles—change the calculus for both navies and commercial operators.
Reactions & quotes
“You need to not have fast-moving pointy bits of metal with explosives bearing down onto you at 2,000 miles an hour.”
Daniel Sternoff, Energy Aspects; Columbia’s Center on Global Energy Policy
Sternoff summarized the security threshold operators require before resuming transit at scale: the near-elimination of strike risk rather than just financial mitigation.
“Insurance isn’t the gatekeeper. It’s still that reluctance to place [on the line] an asset and human beings who didn’t sign up for this.”
David Smith, head of marine, McGill & Partners
Smith emphasized that underwriters are offering coverage but that shipowners are prioritizing crew safety over insurance availability.
“I don’t think a naval convoy is a realistic possibility while we’re at this current level of attacks.”
Matt Wright, principal freight analyst, Kpler
Wright argued that escorts are unlikely to reassure shipping until the intensity of strikes declines; escorts may be more useful after a truce to reinforce commercial confidence.
Unconfirmed
- Extent of a reported Iranian “toll booth” scheme: there are reports of demands for fees from some ships, but the scale and persistence of the practice remain unverified.
- President Trump’s statement about as many as 10 “big boats of oil” transiting after Iranian permission: reporting links these claims to Pakistani-flagged vessels, but the specific identities and cargoes have not been independently confirmed.
- The timing and operational details of any U.S.-backed insurance guarantee program remain uncertain; officials have described partnerships but not full implementation timetables.
Bottom line
Commercial movement through the Strait of Hormuz will not resume en masse until perceived strike risk falls and market actors see repeated, successful passages. Insurance price relief will follow demonstrable security improvements rather than lead them; a multi-week period of safe transits or a verified ceasefire is the likeliest trigger for insurers to meaningfully lower premiums.
Even with a ceasefire, a full physical recovery will take months as producers restart wells and operators work through the backlog of anchored tankers. Policymakers considering escorts or guarantee schemes should prioritize credible, transparent arrangements that address both physical protection and financial backstops, because only a combination of measures will rebuild the confidence needed for sustained flows through this strategically vital waterway.
Sources
- CBS News (news report summarizing interviews and market data)
- Kpler (shipping intelligence firm; traffic and transit analysis)
- Vortexa (energy analytics; tanker counts quoted)
- Reuters (news agency reporting on QatarEnergy comments and LNG damage)
- Bloomberg (news reporting on Iran’s reported fee requests and market developments)