Tensions in the Middle East have reached a boiling point this week as senior US officials reportedly prepare for a potential military strike on Iran, a move that threatens to ignite a wider regional conflict.
According to a Bloomberg report citing individuals familiar with the matter, the US is actively planning for the possibility of a weekend strike in response to escalating hostilities between Iran and Israel with with the New York Times reporting earlier in the week Iranian officials will consider laying mines along the Strait of Hormuz if the US does enter the war.
Freight markets are reacting swiftly. VLCCs have surged to nearly $55,000 a day, more than doubling from just a week ago when global averages hovered in the mid-$20,000 a day range. LR2 tankers have similarly spiked to over $45,000 a day, their highest level since July 2024.
This surge is particularly significant given that 60 to 65% of global VLCC and LR2 liftings are tied to the Middle East region, according to data from Jefferies, making these vessels the most exposed to geopolitical turbulence in the Persian Gulf and surrounding waters.
The Greek Ministry of Shipping issued an advisory earlier this week, urging all Greek-flagged vessels to avoid Iranian waters wherever possible. The advisory cites historical risks to freedom of navigation and merchant ship safety, particularly near Iran’s shores, the Strait of Hormuz, and the Gulf of Oman.
The most immediate impact has been felt in the insurance markets. According to Marsh McLennan, the world’s largest marine insurance broker, hull and machinery insurance rates for vessels transiting the Strait of Hormuz have jumped more than 60% in just a matter of days.
Premiums have risen from 0.125% to 0.2% of a vessel’s value. For a $100m tanker, this pushes insurance costs from $125,000 to $200,000—with brokers warning that prices could rise further if an actual strike materialises.
Insurers are also closely monitoring electronic interference, which has been affecting navigational systems in the region, particularly near Iran’s Port of Bandar Abbas. The UK Maritime Trade Operations (UKMTO) and the US-led Combined Maritime Force’s Joint Maritime Information Centre (JMIC) have issued multiple advisories warning ships of GPS spoofing and signal anomalies.
A collision between two tankers near the strait earlier this week—one of which reportedly transmitted irregular positioning data—has heightened suspicions of deliberate interference.
Insurers are also increasingly concerned about the Iranian-backed Houthi militant group expanding its targeting of commercial vessels.
Several speakers at Marine Money Week 2025 in New York yesterday discussed the Israel-Iran conflict and its implications for shipping, with most senior tanker executives dismissing the likelihood of a prolonged closure of the Strait of Hormuz.
Svein Moxnes Harfjeld, CEO of DHT Holdings, said there was no precedent for a closure of the strait, while Lois Zabrocky, CEO of International Seaways, said China and India, massive importers of Middle Eastern oil, would do all they could to make sure the strait remains open.
Lars Barstad, the CEO of Frontline, another major tanker owner, described the market dynamics since the Israel-Iran conflict kicked off last Friday as a “Mexican standoff” between charterers and owners.
Knut Traaholt, the CFO at Flex LNG, reckoned Iran would sue for peace, and the country had no interest in blocking the strait, a vital source of revenues for the Middle Eastern republic.
John Boots, CFO of CoolCo, added historical context, pointing out that even during the Iran-Iraq war of the 1980s and the two Gulf Wars, the strait was never properly closed.
Kristian Sørensen, CEO of BW LPG, discussed the current rush to secure LPG cargoes and ships out of the Middle East as all as the US as an alternative.
