Insurers Tighten Shipping Controls in Strait of Hormuz, Highlighting Energy Import Risks for Japan and South Korea

Introduction

The Strait of Hormuz, the world's most critical energy chokepoint, is facing a sharp tightening of shipping insurance conditions. Insurers are no longer automatically underwriting vessels transiting the area but are assessing each case individually, imposing stringent war risk clauses that directly impact the stability of the global energy supply chain.

Key Developments

According to the *Asian Business Review*, Oliver Miloschewsky, Aon's Head of Marine Asia, noted that the Iran war has become a permanent operational condition for shipping companies, insurers, and cargo owners, rather than a temporary disruption. Vessel traffic through the Strait of Hormuz remains far below pre-crisis levels, with insurers evaluating each voyage separately.

"The recent turnarounds and limited resumption of transit by some vessels should not be interpreted as a sign of recovering market confidence," Miloschewsky said. Insurers need to see a sustained decline in threats, clear safety conditions, and enhanced risk mitigation measures before confidence is restored.

Law firm K&L Gates noted that current traffic through the strait remains far below the hundreds of daily transits seen before the conflict. "The market is pragmatic—many mainstream shipowners still avoid the route. Confidence is conditional, not structural."

Supply Chain Impact

Rising marine insurance premiums directly affect transportation costs. Shipowners pass on the additional risk costs to charterers, leading to increased volatility in spot freight rates. Meanwhile, voyage planning must incorporate greater flexibility—vessels may be rerouted at any time, increasing voyage distance and transit time.

K&L Gates observed that shipowners are becoming more selective in deploying vessels, while charterers are demanding more optional route clauses. There has also been a rise in back-to-back charters and short-term fixtures to limit forward risk exposure.

Port Impact Analysis

The decline in Strait of Hormuz traffic directly affects the operations of surrounding ports. Jebel Ali Port and Fujairah Port in the UAE, as regional transshipment hubs, are experiencing throughput fluctuations. Some cargoes originally scheduled for passage through the strait are being diverted to alternative transshipment hubs or rerouted via the Cape of Good Hope, increasing port congestion and operational pressure.

Freight and Transport

Cracks are emerging in the tanker and LNG carrier markets. Shipowners demand higher war risk surcharges, with clear freight premiums. Effective capacity is reduced due to longer voyages. For time-sensitive container shipping, rerouting via the Cape of Good Hope would extend transit times on Asia-Europe routes by 10–15 days, further pushing up global freight rates.

Regional Impact

Asia-Pacific: Japan and South Korea are hit hardest, as both countries import most of their crude oil and LNG from the Gulf region. K&L Gates stated that Korean buyers are exploring alternative energy sources, including US LNG and Australian supplies, but this shift will take time.

Middle East: As the front line of the conflict, insurers in the region face significant claims exposure. Transshipment operations at regional hubs (such as Dubai) are under pressure.

Europe: If the strait remains blocked over the long term, Europe's energy supply will become further strained, accelerating the search for alternative energy sources.

Industry ViewsK&L Gates emphasizes that the current shipping market no longer responds to isolated geopolitical events, but rather faces multiple long-term pressures, including tensions in the Taiwan Strait, changes in Sino-Japanese relations, etc., all of which are reshaping trade flows. Japanese companies are accelerating the shift of procurement to Southeast Asia and India.

Shipping companies are advised to immediately review charter contracts and cargo contracts, with special attention to force majeure, war risk, and route change clauses. Many old clauses are no longer suitable for the current risk environment.

Future Outlook

In the next 12-18 months, shipping risks in the Strait of Hormuz will be difficult to significantly alleviate. Insurers will maintain prudent underwriting unless there is a clear geopolitical detente and economic recovery. This means Asian buyers must accelerate energy diversification, while shipping companies need to establish more flexible route networks.

In the long term, the global shipping insurance model may undergo structural changes, with war risk becoming a normalized consideration, affecting newbuilding orders and vessel deployment strategies.

Conclusion

Insurers' tighter control over navigation in the Strait of Hormuz is not just a short-term market adjustment, but a turning point in global supply chain risk management. For Asian economies that rely on Gulf energy, this is a wake-up call to reassess their supply chain resilience. The shipping industry must adapt to a new "risk normal"—planning every route amidst uncertainty.