Oil vessel transit costs through the Strait of Hormuz have escalated significantly after the Iran war, led by a sharp climb in additional war risk premiums and cargo insurance costs, an executive from Emirates National Oil Company (ENOC) said on Wednesday.
Cargo insurance is now a considerable percentage of the value of the cargo being shipped, according to ENOC director Paul Bradshaw.
"I have seen anywhere up to five, six per cent. So that could be another $10 million on your cargo insurance," Bradshaw told the APPEC conference.
Apart from this, there is also a much higher additional war risk premium for transits.
"If you're trying to get out, the rate for that used to be zero prior, and now the rate is anything up to 10 per cent of the cargo," Bradshaw said.
Transit costs had escalated into the $10 million to $20 million range, and some market participants had decided not to take on insurance, he added.
More national oil companies had also been taking back control of their own shipping operations to better manage costs and voyages.
"What we have seen recently is some of the NOCs taking on their own shipping...so they have more control over the ability to exit in times of conflict like that," Bradshaw said.
There was a limited number of shipowners willing to take the risk due to safety reasons, he said.
Disruptions around key chokepoints this year following the Iran war have pushed cargoes onto longer and more complex routes, altering freight economics and vessel availability.
(Reporting by Jeslyn Lerh; Editing by Tom Hogue and Stephen Coates)
