Ship insurers have paid out more that $100 million in damages after a spate of tanker attacks and seizures in the Persian Gulf this summer as tensions between the U.S. and Iran have escalated.
The Norwegian Shipowners’ Mutual War Risks Insurance Association, known as DNK, said war risk premiums are up 10-fold this year, with ships crossing the Strait of Hormuz paying between $300,000 and $400,000 per sailing.
“The cost of shipping in one of the world’s busiest waterways has gone up substantially and we don’t expect an easing of tensions anytime soon,” association Managing Director Svein Ringbakken said in an interview.
Some 20% of the world’s oil supply passes on tankers through the Strait of Hormuz, the narrow passage between the Persian Gulf and the Indian Ocean.
The DNK said probes into four attacks on tankers in May off Fujairah in the Gulf of Oman near the entrance to the strait, and two more in the strait in June, determined that the ships had been blasted with mines with up to 50 kilograms, or 110 pounds, of explosives.
“There were magnetic limpet mines attached on the ship-hauls and caused quite a lot of damage,” said DNK senior security analyst Lars Vold.
Tensions in the Persian Gulf region have remained high since the first attack in May, when Norway’s Andrea Victory tanker was hit by an explosion in the Port of Fujairah, leaving a gaping hole at the vessel’s stern, beneath the waterline. The mines were placed close to the engine rooms of all six ships.
The Adrian Darya 1, an Iranian supertanker previously held by British authorities in Gibraltar for allegedly moving crude to Syria in violation of U.S. sanctions, is moving slowly in the Mediterranean Sea, with no port willing to take it in after U.S. warnings of repercussions.
The tanker’s safe return to Iran is a condition of Tehran for the release of the U.K.-flagged and Swedish-owned tanker Stena Impero tanker, held by Iran’s Revolutionary Guard for almost two months.
“Nothing really points to a de-escalation,“ Mr. Ringbakken said. ”Safe navigation in the Persian Gulf continues to be a serious issue, with real risks involved.”
Supertanker freight rates from the Persian Gulf to Asia hover at around $42,000 a day. A round trip sailing from Iran to Singapore takes up to two months.
“If you take out the war-risk premium for the trip, crew expenses and fuel, the ship owner makes a low single-digits profit at most,” said a Singapore broker. “In other parts of the world supertankers command between $20,000 and $25,000 at most. The cost is more than they make.”
The Andrea Victory has been repaired and returned to service. Another ship, the Norwegian-owned Front-Altair, which was damaged by mines in July, is being repaired in Dubai, and the owners expect to return it to service by the end of the year.
Source: Wall Street Journal
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