The deterioration of the situation in the Middle East pushed up the cost of shipping and increased insurance rates in the Persian Gulf and the Red Sea

The deteriorating situation in the Middle East has led to higher shipping costs and higher insurance rates in both the Persian Gulf and the Red Sea. Insurance costs for vessels in the Persian Gulf have returned to their highest levels in decades, reflecting the market ' s concern about the increased risk of attacks by Iran. According to David Smith, the head of the maritime operations of the insurance broker, McGilland Partners, the insurance premiums currently offered by insurance companies to cover war risks on ships are about 3 to 6 per cent of the value of the ship, several times the normal 0.25 per cent rate in peacetime. He added that “the market is now of the view that the level of risk may have reached its highest level throughout the conflict”. Increasing instability in the Middle East is also pushing up the cost of shipping in the Red Sea. Smith indicated that the escalation of attacks by Yemeni Al-Houthi forces on ships was driving a sharp rise in insurance prices, with the impact on ships associated with Israel or Saudi Arabia being particularly pronounced. Currently, the Red Sea ship war risk rate is usually 0.3 to 1 per cent of the ship ' s value, compared to 0.1 per cent or lower a month ago。