Insurance rates for tankers transiting through the world’s most important oil choke point have skyrocketed in recent weeks, according to the CEO of a U.S.-listed shipping company.
Six oil tankers and a U.S. spy drone have been attacked since May either in, or near, the Strait of Hormuz — a strategically important waterway which separates Iran, Oman and the United Arab Emirates.
Ardmore Shipping is a U.S.-listed company based in Ireland, with a business of owning and operating a fleet of tankers that move refined oil products.
“At the moment, it is business as usual (but) insurance to transit the Strait of Hormuz has actually increased 10-fold in the last two months as a consequence of the attacks,” Gurnee said.
These separate premiums are calculated according to the value of the ship, or hull, for a seven-day period, Reuters reported.
Last month, a Nikkei Asian Review report citing Japanese industry sources said additional insurance for tankers sailing through the Strait of Hormuz now cost 10 times what it did before two ships were attacked earlier in June.
CNBC has not been able to independently verify these sources.
This extra charge has since jumped up to 0.25% since the June 13 attacks, the report added.
Why is the Strait of Hormuz so important?
It plays a pivotal role for Asian economies that are heavily dependent on oil imports from the Middle East.
Flows through the narrow channel in 2018 made up about one-third of total global seaborne traded oil.
More than one-quarter of global liquefied natural gas trade (LNG) also transited the Strait of Hormuz last year.
Daily oil flow in the Strait of Hormuz averaged 21 million barrels per day in 2018, according to the U.S. Energy Information Administration (EIA).
That’s the equivalent of about 21% of global petroleum liquids consumption.