VLCC insurance jumps as freight rates escalate due to tensions

A sudden Israeli airstrike on June 13 has sharply escalated tensions with Iran, pulling the long-simmering standoff into open conflict and shaking global oil and shipping markets. The immediate aftermath saw Brent crude spike nearly 10% intraday to $76 per barrel, but the more telling impact was seen in freight rates and maritime insurance costs. Charterers and shipowners reacted quickly, pricing in heightened risk across the Strait of Hormuz, a key artery for global energy flows, despite its remaining technically open. War-risk insurance premiums surged overnight. For instance, the cost to insure a Very Large Crude Carrier (VLCC) on the Ras Tanura–Ningbo route jumped from $0.25 to $0.70–$0.80 per barrel. Standard contract terms have changed, with 96-hour cancellation clauses now common. Freight markets also tightened, with TD3C rates for July crude shipments rising by eight World scale points to WS 65.