Israel-Iran Ceasefire Lowers Gulf Shipping Costs

Shipping and war-risk insurance costs in the Arabian Gulf have fallen significantly over the past 48 hours, following the implementation of a ceasefire between Israel and Iran, industry sources told Reuters on Thursday. However, they cautioned that any renewed tensions could swiftly reverse the trend.

Calm Brings Relief—but for How Long?

Rates for chartering very large crude carriers (VLCCs)—capable of transporting around 2 million barrels of oil—dropped from over $60,000 per day last week to around $50,000 on Thursday, according to shipping data. The decline comes as fears ease over a potential Iranian closure of the Strait of Hormuz, through which nearly one-fifth of the world’s oil and gas consumption flows.

“The rates have come down, yes, but the market remains extremely cautious,” said a senior executive at a European shipping firm. “Any breach of the ceasefire—or even a credible threat—could send prices surging again within hours.”

War Risk Insurance Also Falls Slightly

In tandem with shipping rates, war risk insurance premiums have eased. According to insurance sources, the cost for voyages through the Gulf has fallen to between 0.35% and 0.45% of a vessel’s value, down from a peak of 0.5% earlier in the week. For comparison, the pre-conflict average was around 0.3%.

“Premiums have definitely come down,” said David Smith, head of marine insurance at McGill and Partners.

“While war risk costs remain significant, more insurers are now willing to underwrite Gulf voyages, which, combined with improved political optics, is putting downward pressure on rates. Still, the situation remains extremely volatile.”

Greece Relaxes Maritime Alerts

Adding to the signs of de-escalation, Greece’s Ministry of Shipping on Thursday relaxed its safety requirements for commercial vessels in the region. The ministry no longer advises mandatory reporting for ships transiting the Strait of Hormuz, citing what it called “an improved outlook.”

Outlook: A Pause, Not a Resolution

While the drop in rates may signal temporary market relief, analysts warn that this is not a structural recovery. The geopolitical fragility surrounding the Strait of Hormuz means that risk pricing in shipping and insurance will remain sensitive to even the smallest flare-ups.

“This isn't the end of the crisis—it's a pause,” one Gulf-based risk analyst told us.

“Markets are breathing, not exhaling.”