Middle East Conflict Pushes Shipping Risks to Record High
Shipping risks have increased in two critical Middle East waterways: the Strait of Hormuz and the Bab al-Mandab strait. The renewed conflict between the US, Iran, and Saudi Arabia has disrupted oil shipments out of the Persian Gulf.
The Strait of Hormuz, the primary route for oil exports, is deemed too risky by many shipowners due to ongoing fighting. As a result, Saudi Arabia has increased its reliance on pumping oil through pipelines and loading it onto tankers in the Red Sea.
Most of these tankers then travel south through the Bab al-Mandab strait, which borders Yemen. The Houthi militia, backed by Iran, has announced a blockade on Saudi Arabia's Red Sea ports, making ships vulnerable to attacks.
The Houthis claimed to have struck a Saudi tanker in the Red Sea off the coast of Yemen, although it was unclear if the ship was actually hit. War-risk insurers are not providing coverage for ships that pick up cargo at Saudi ports due to the heightened risk levels.