Several sources told The Insurer service, which specializes in the insurance sector, that the insurance rates offered against maritime war risks for passage through the Strait of Hormuz are still in the range of ten percent. The decrease in maritime traffic and the continuation of attacks on commercial ships continue to put pressure on the market, raising prices.
Three sources in the marine insurance market estimated insurance prices against maritime war risks in the Strait of Hormuz at between 7.5 percent and 12.5 percent, according to Reuters, citing the “Insurer” service.
A source in the brokerage said that the prices range between 7.5 percent and ten percent, while a source in insurance underwriting explained that they are about 10 percent, and another source in insurance underwriting said that he raised the prices offered to 12.5 percent early last week. Another source in insurance underwriting stated that there is no existing situation in the Strait because things are changing quickly.
The mediation source explained that the current operating environment is as difficult as it has been since the outbreak of the conflict, pointing to concerns related to compliance in the northern corridor under Iranian control, and the high frequency of attacks on ships using the southern route in the strait.
He said that on the southern route, attacks had become so frequent that they were almost expected since actions against commercial shipping escalated again in late July.
He added that this creates a cycle of developments that strengthen the effects of each other. This pushes prices to rise, if an attack occurs, which undermines confidence in the operating environment and leads to an increase in prices in conjunction with a decline in transit operations. The latter limits the premiums entering the market; This imposes further upward pressure that may push prices to a commercially unviable level. This increases the pressures that reduce crossing operations.
The brokerage source said that this environment led to fluctuations in the demand of some insurance companies. Companies that were offering 100 percent coverage often reduce quotas, while some companies are relocating their capacity in the region around the Arabian Peninsula, and others are not currently offering services to the Strait of Hormuz.
For ships wanting to transit through the Iranian-controlled Northern Passage, there are significant compliance and sanctions concerns. Last month, the Lloyd's Market Association issued a clause to process transit fee payments in the Strait of Hormuz.
One of the brokerage sources said that the market has not yet begun to promote this item or push its implementation. The legal teams of major brokers and insurance underwriting companies are analyzing its implications. He added that the issue of sanctions is being dealt with through pledges whose wording is very similar in meaning across the market.
While insurance coverage for ships in the Red Sea has become more difficult since the Houthis announced entry into the war on July 20.
“Kepler data” showed 49 crossings over the weekend of primary commodity ships through the Bab al-Mandab Strait, a decrease from 55 the previous week.
Shipping cost from South Korea to the Middle East
The cost of shipping containers from South Korea to the Middle East continued to rise last month, amid ongoing geopolitical tensions in the region.
South Korean Yonhap News quoted the Korean Customs Administration as saying, on Tuesday, that the average cost of transporting a standard container from South Korea to the Middle East rose by 14.5 percent over the past month compared to the previous month to 8.78 million won ($6,217).
It is noteworthy that sea freight rates have continued to rise since last March.
Meanwhile, the average cost of transporting a standard container from South Korea to the US West Coast over the past month rose by 11.1 percent monthly to 8.56 million won, while the cost of transporting it to the US East Coast rose by 14.4 percent to 8.14 million won.
The cost of transporting a container from South Korea to the European Union rose 36.4 percent to 5.86 million won.
It is noteworthy that the cost of transporting containers includes sea freight fees, commissions and other expenses borne by South Korean exporters, according to the General Customs Administration.
US stock index futures fell on Tuesday, as hopes for a peace agreement between the United States and Iran faded, pushing oil prices and Treasury yields higher, and bringing concerns about inflation back to the forefront of the markets.
Iran said it would shift to a "comprehensive offensive" military mode after negotiation efforts aimed at ending the war with the United States faltered, according to a high-ranking Iranian official who spoke to Reuters. Washington also ruled out extending the temporary ceasefire agreement that expired on August 17.
The developments led to a rise in Brent crude futures by 0.4 percent, putting them on track to achieve gains for the third session in a row.
In the bond market, the 30-year US Treasury bond yield rose to its highest level since 2007, while the benchmark 10-year bond yield stabilized near its highest level since January 2025. High yields usually put pressure on technology company stocks, as it reduces the present value of future profits and raises borrowing costs.
Tesla and Nvidia led growth stock losses, with their shares falling by more than 1 percent in pre-market trading. Shares of Meta Platforms, Microsoft, and Alphabet also declined.
Shares of semiconductor and chip companies declined after strong gains in the previous session, as shares of Micron Technology, Marvell Technology, Advanced Micro Devices, and Intel fell by rates ranging between 2.6 and 4.8 percent.
Shares of data storage companies SanDisk and Western Digital also fell by more than 5 percent each, being among the biggest losers in pre-market trading.
The Chicago Stock Exchange's volatility index, known as the "fear index" on Wall Street, rose to its highest level in about two weeks, indicating rising investor caution.
By 4:50 a.m. EST, Dow Jones futures fell 79 points, or 0.15 percent, while Standard & Poor's 500 futures fell 42.75 points, or 0.55 percent. Nasdaq 100 futures also fell by 351.5 points, or 1.17 percent.
The Standard & Poor's 500 index closed lower in the previous session, retreating from its record levels, with renewed concerns about inflation due to the rise in oil prices.
Financial market data showed that traders are still 96 percent likely to raise interest rates by 25 basis points during the current year, despite the decline in expectations for raising interest rates in September following the release of moderate inflation data last week.
Minutes from the Federal Reserve's July meeting, scheduled for release on Wednesday, are expected to provide further indications of policymakers' assessment of economic developments and the path of interest rates.
Attention will also be drawn to Federal Reserve Chairman Kevin Warsh's speech at the Jackson Hole symposium next week, searching for indicators regarding future monetary policy directions.
Watch the results of the retail sector
At the same time, the season for announcing second-quarter corporate results is coming to an end, with Home Depot results awaited before the market opens on Tuesday.
The results of the home improvement retailer may provide new indicators of the strength of the American consumer, after the release of weak retail sales data in July. Walmart, the largest American retailer, is scheduled to announce its results on Thursday.
Strong profits for a number of sectors, including major companies in the field of artificial intelligence, helped the Standard & Poor's 500 and Dow Jones indices reach record levels earlier this month. Investors are now awaiting Nvidia's results next week as the next most prominent test of the performance of artificial intelligence stocks.
Shares of American technology companies have witnessed sharp fluctuations over the past months, in light of investors' continued concerns about the feasibility of huge spending on artificial intelligence.
In a related context, media reports reported that the annual revenues of Anthropic, the developer of the Cloud program, exceeded $65 billion by the end of July, an indication of the company’s rapid growth before offering its shares for the expected public offering later in the year.
