Key Takeaways
- Hormuz remains critical. As of 5 May 2026, JMIC rated the Arabian Gulf / Strait of Hormuz and the Gulf of Oman / Arabian Sea as CRITICAL maritime-risk areas. It also reported that Hormuz traffic remained significantly reduced.
- Traffic through Hormuz is still far below normal. As of JMIC Update 041 dated 5 May 2026, the historical average was reported at around 138 vessels/day, compared with 6 transits on 3 May and 5 transits on 4 May.
- Red Sea and Bab el-Mandeb risk has moderated, but not normalised. As of 5 May 2026, JMIC rated Bab el-Mandeb / Gulf of Aden / Southern Red Sea as MODERATE, with no confirmed maritime attacks and a stable posture, while noting that traffic remained below the pre-2023 baseline.
- Somali piracy is now a separate Horn of Africa risk. As of 5 May 2026, JMIC rated the Somali Coast / Somali Basin as SEVERE, citing three merchant vessels held by Somali pirates and a hijacked dhow likely being used as a pirate mothership.
- Gulf war-risk premiums remain materially elevated. As of S&P Global reporting on 30 March 2026, Additional War Risk Premiums for Gulf tanker movements had eased to around 1% of Hull & Machinery value from about 2.5% earlier in March, but were still up to eight times pre-war levels. Some reported mid-March cases reached up to 10% of H&M value. (S&P Global)
Insurance Is Available, but Standard Capacity Has Changed
The insurance market signal is nuanced. On 23 March 2026, the Lloyd's Market Association stated that marine war insurance remained available in the Lloyd's and London company market for vessels wishing to transit Hormuz. The LMA also said that, based on a survey of key market participants, 88% still had appetite to underwrite international-linked hull war risks and more than 90% had appetite to underwrite international-linked cargo. It argued that reduced vessel traffic was being driven mainly by crew and vessel safety, not a simple lack of insurance availability. (LMA)
That does not mean the market has returned to normal. On 3 March 2026, the Joint War Committee's JWLA-033 circular added Bahrain, Djibouti, Kuwait, Oman and Qatar to the Listed Areas and amended the Persian/Arabian Gulf, Gulf of Oman, Indian Ocean, Gulf of Aden and Southern Red Sea category. The circular also stated that application on individual contracts would be a matter for specific negotiation.
Howden Re's 1 April 2026 market assessment described a structural shift in Gulf war-risk pricing: annual cover removed, Gulf cover moving voyage-by-voyage, and pre-existing covers honoured but not renewed at old terms. This is the practical point for shipowners and charterers: insurance can exist, but the executable cost and terms can be materially different from the pre-conflict regime.
S&P Global reported on 30 March 2026 that Gulf tanker AWRP had reached around 2.5% of H&M value per seven-day period earlier in March, before easing to around 1% by the week ended 27 March. Some successful Hormuz transits reportedly paid around 0.8% after a no-claims bonus, but even then the level remained up to eight times higher than the pre-war range of around 0.1-0.15% or lower. (S&P Global)
The tail risk is still large. The same S&P Global article reported cases where some stranded tankers paid up to 10% of H&M value as AWRP in mid-March, and that close to 40 Long Range tankers were stuck in the Gulf as of early the previous week, according to shipping-broker estimates. (S&P Global)
This is why war-risk insurance now behaves like a shadow freight index. A route does not need to be legally closed to become commercially thin. If the premium, crew-risk tolerance, underwriter appetite and charter-party allocation do not clear simultaneously, vessel supply becomes constrained even when some physical transits remain possible.
Hormuz is not the Same Problem as the Red Sea
For modelling purposes, Hormuz and the Red Sea should not be collapsed into one rerouting assumption.
For Red Sea and Suez-linked trades, the Cape of Good Hope remains the major physical alternative. It adds tonne-miles, bunker burn, voyage time and working-capital cost, but it is a route substitute.
For Hormuz-linked cargoes, the alternative set is narrower. A ship loading inside the Gulf still needs a viable Hormuz exit unless the cargo is shifted to a different origin, moved through limited pipeline bypass capacity, deferred, drawn from inventories, or handled through a protected transit protocol. The IEA's 2025 data show why this matters: nearly 20 mb/dof oil and oil products, around 25% of world seaborne oil trade, transited Hormuz in 2025, while available crude bypass capacity through Saudi and UAE pipelines was estimated at only 3.5-5.5 mb/d. (IEA)
The LNG constraint is even tighter. The IEA reported that about 93% of Qatar's LNG exports and 96% of the UAE's LNG exports transited through Hormuz in 2025, representing 19% of global LNG trade. It also stated that there are no alternative routes to bring those Qatar/UAE LNG volumes to the global market other than existing liquefaction facilities. (IEA)
The commodity exposure is wider than oil
The Hormuz shock is not only an oil-price story. IEA's April 2026 topic page highlighted that more than 30% of global urea trade, about 20% of ammonia and phosphate trade, around 8% of global aluminium supply and roughly half of global seaborne sulphur trade are linked to flows through the Strait of Hormuz. (IEA)
That matters for commodity risk systems. A sustained Hormuz disruption can transmit into fertiliser, aluminium, sulphuric acid, refining inputs, industrial supply chains and food-price risk, even where the underlying commodity is not directly priced off crude oil.
Security operations remain fluid
The operational environment is changing quickly. On 4 May 2026, JMIC issued conditions for orderly transit of the Strait of Hormuz, stating that the maritime security threat level remained CRITICAL and that mariners should expect increased naval presence, potential VHF hailing and congestion near anchorage areas. The advisory also said the US had established an enhanced security area south of the Traffic Separation Scheme and that transit via or close to the TSS should be considered extremely hazardous due to mines not fully surveyed and mitigated.
On 5 May 2026, Reuters reported that the CS Anthem chemical tanker had exited the Strait of Hormuz, becoming the second known commercial US-flagged vessel to do so while protected by the US military, after the Alliance Fairfax. Reuters also reported that three other US-flagged ships remained in the Gulf. (Reuters)
The same day, Reuters reported that the US president said he would briefly pause the escort operation, citing progress toward an agreement with Iran, while the blockade would remain in force. For insurers and charterers, that reinforces the core point: route liquidity can change within hours, so executable freight is now a function of operational windows, not only published route status. (Reuters)
Freight and Risk-model implications
For tankers and LNG, war-risk premiums directly affect voyage economics. If AWRP is quoted as a percentage of H&M value for a seven-day period, the premium becomes a large cash cost for high-value vessels and can exceed the economic tolerance of a fixture.
For dry bulk and containers, the effect is often indirect but still material. The mechanism is capacity absorption, lower schedule reliability, bunker cost, port congestion, higher risk buffers and delayed cargo availability.
For a practical voyage model, war-risk should now be treated as a live input:
route cost = AWRP + expected delay cost + bunker and reroute cost + demurrage risk + security cost + cargo optionality cost
The main modelling error would be to treat AWRP as a fixed surcharge. It is now a conditional variable driven by vessel value, flag, ownership links, cargo type, route, port call, duration, underwriter appetite, crew-risk policy and naval/security conditions.
The most useful indicators for freight, bunker and commodity-risk models are:
- Daily Hormuz transit counts versus the JMIC historical average of around 138 vessels/day, especially whether volumes move beyond the single-digit level reported for 3-4 May 2026.
- AWRP quotes for Gulf tanker, LNG and high-value container exposures.
- Underwriter appetite for specific flags, ownership links and cargo types.
- JMIC/UKMTO updates on mines, VHF hailing, GNSS/AIS interference and anchorage congestion.
- Whether US or other naval-security protocols remain active, paused or reintroduced.
- Red Sea/Bab el-Mandeb posture, now rated Moderate as of 5 May, but still below pre-2023 normalisation.
- Somali Coast/Somali Basin piracy risk, rated Severe as of 5 May.
Bottom line
As of 6 May 2026, the Gulf shipping market has not normalised. Hormuz remains a critical maritime-risk zone, Red Sea/Bab el-Mandeb risk has moderated, and Somali piracy has re-emerged as a separate Horn of Africa variable.
The commercial chokepoint is no longer only the physical strait. It is the interaction between crew safety, insurance pricing, underwriter appetite, naval-security windows and charter-party risk allocation.
For commodity traders, shipowners, charterers and risk managers, war-risk insurance should now be treated as a dynamic pricing input in freight, bunker, cargo optionality and supply-chain risk models, not as an exceptional one-off surcharge.
