- War risk insurance premiums for Red Sea transits have more than doubled following fatal Houthi attacks on Greek vessels.
- Despite the spike in risk, current ship traffic via the Bab al-Mandab Strait remains relatively stable, though far below pre-crisis levels.
- Many vessels are now signaling Chinese ownership to avoid being targeted amid rising regional tensions.
Marine insurance premiums for ships transiting the Red Sea have surged after Yemen-based Houthi rebels launched fresh attacks on two Greek-operated bulk carriers on July 6–7. One vessel reportedly sank, while the other was left drifting, with three crew members killed. These were the most severe assaults since late 2024.
According to Platts, the additional war risk premium for vessels moving through the Bab al-Mandab Strait has jumped from 0.3% to at least 0.7% of a ship’s hull value. Although these vessels matched previous Houthi targeting patterns due to Israeli ties, industry observers warn that risk exposure now extends beyond such affiliations.
Risk consultancy Windward estimates that over 15,000 ships—or about one in six globally—have connections, such as port calls, that may place them in the Houthis’ crosshairs. “We don’t feel there is a low risk to any ship moving through this region,” said Dryad Global CEO Corey Ranslem, stressing that onboard armed guards, as seen on the attacked Ultramax Magic Seas and Handysize Eternity C, are proving ineffective.
Casualties and Historical Context
The recent incidents add to a string of over 130 Houthi attacks on vessels allegedly linked to Israel, the US, and the UK since the onset of the Israel-Hamas conflict in October 2023. Most ships sustained limited damage, but some, like the Rubymar and Tutor, were sunk. Three seafarers also lost their lives in last year’s strike on the True Confidence.
Traffic Disruption and Strategic Diversions
Due to ongoing threats, most global shipping companies have rerouted their vessels around the Cape of Good Hope, significantly increasing bunker consumption and ton-mile demand. “Continuing volatility and uncertainty” make rerouting the only viable safety measure, Ranslem said.
Traffic through the Bab al-Mandab Strait has declined by nearly two-thirds compared to normal levels and has remained consistently low since Q1 2024. As of midday July 8, 20 ships were observed passing through, including 12 containerships, 10 dry bulkers, and nine oil/chemical tankers—down from 38 vessels on July 7. June averaged 39 daily transits, according to S&P Global’s Commodities at Sea.
Chinese Affiliation as a Shield
To mitigate targeting risk, a growing number of vessels are broadcasting affiliations with China, Iran’s top trading partner and the primary supporter of the Houthis. Messages such as “ALL CHINESE,” “CHINA CREW_OWNER,” and “CHINESE OWNERSHIP” are increasingly common on AIS broadcasts.
The regional maritime security situation remains fluid, with insurance markets adjusting to rising threat levels and shipowners continuing to evaluate safer routing alternatives to the Red Sea corridor.
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Source: S&P Global
