- War risk premiums for vessels sailing through the Red Sea have fallen sharply following the recent ceasefire and decline in Houthi attacks.
- In contrast, Black Sea war risk premiums have surged, rising up to 250% amid escalating Ukrainian strikes on Russian maritime assets.
- Charterers are increasingly willing to resume Red Sea transits, although shipowners still seek higher compensation for transit risks.
Marine insurance markets are undergoing a major shift as geopolitical conditions evolve across the Red Sea and the Black Sea. According to marine insurance and maritime security sources, war risk premiums have decreased for Red Sea transits but jumped substantially for Black Sea voyages, reflecting the diverging threat levels in both regions. The changing security landscape is influencing freight rates, vessel deployment decisions, and global supply chain risk assessments.
Red Sea Risk Premiums Ease After Ceasefire
War risk costs for Red Sea voyages have dropped to their lowest level since late 2023. The decline follows the early October ceasefire between Israel and Hamas, after which Yemen-based Houthi militants paused attacks on merchant vessels and released 11 crew members from the Eternity C, held for nearly five months.
Security advisory firm Ambrey noted that operational risks for ships without Israel-linked exposure have become “tolerable.” The Houthis have also “likely” halted attacks on Israel-affiliated shipping during this period.
Insurance Rates at Their Lowest in a Year
Marcus Baker, Head of Marine at Marsh, confirmed that the Additional War Risk Premium (AWRP) for Red Sea sailings has fallen significantly.
A UK-based insurance source reported that:
- AWRP dropped to around 0.2% of hull value,
- down from 0.5% before the ceasefire.
Although the risk environment has eased, experts caution it remains volatile. Vessel Protect’s Head of Operations, Munro Anderson, stressed that this is not a return to normality, but rather a temporary lull in a prolonged conflict.
Freight Market Impact
Falling insurance costs have encouraged more charterers to consider Red Sea transits, though shipowners continue to request premium compensation for risk.
Platts assessed freight on Dec. 4 for 65,000 mt of clean petroleum products from the Arab Gulf:
- $52.31/mt via the Red Sea
- $50.77/mt via the Cape of Good Hope
While transit numbers through the Bab al-Mandab Strait have improved—37 ships per day, compared with 34 last year—traffic remains well below pre-Gaza conflict levels of more than 70 ships per day.
BIMCO’s Chief Security Officer, Jakob Larsen, warned that safety assessments remain the responsibility of ship managers, given the fragile ceasefire and unpredictable security conditions.
Black Sea Premiums Surge Amid Escalating Strikes
While the Red Sea sees temporary relief, the Black Sea is experiencing rapidly worsening risk conditions. Ukrainian drone attacks on Russian maritime assets and infrastructure have intensified, pushing war risk premiums upward.
Insurance Rates Increase by 250%
According to Marsh’s Marine Hull UK War Leader, Dylan Mortimer:
- AWRP for voyages to Russian Black Sea ports has surged by 250%,
- rising from 0.25%–0.30% of hull value in mid-November.
Platts assessed AWRP for crude at:
- 85 cents/b on Dec. 4, up from 65 cents/b on Oct. 31.
Attacks on Tankers Drive Risk Higher
Since Nov. 28, Turkey has reported three tanker attacks near its northern coast, all vessels with frequent calls to Russian ports:
- Ukraine confirmed drone operations on the Suezmax Kairos and Aframax Virat.
- Ukraine denied involvement in an incident involving the smaller tanker Midvolga-2.
Meanwhile, freight rates have risen in response. The Suezmax rate for 140,000 mt of Russian crude to West Coast India climbed to:
- $48.21/mt on Dec. 3, from
- $42.86/mt on Nov. 27.
Security experts say increased drone strike capabilities now threaten ships across the wider Black Sea region.
Rising Threat Levels for Both Russian and Ukrainian Ports
Ambrey noted that risk levels for tankers calling both Russian and Ukrainian ports have escalated sharply, driven by operational activity and strategic ambiguity.
A London-based underwriting source reported:
- AWRP for ships bound for Ukrainian ports is now 0.8%–1%,
- up from 0.4% in late November.
Russian President Vladimir Putin has warned of retaliatory strikes on Ukrainian port infrastructure and ships, further raising concern over regional escalation.
Impact on Global Trade Flows
Higher insurance premiums are adding significant costs:
- Russia has exported 1.44 million b/d of crude and condensate from the Black Sea this year.
- Ukraine has shipped 25.9 million mt of agribulk, according to S&P Global data.
Did you subscribe to our daily Newsletter?
It’s Free — Click here to Subscribe!
Source: S&P Global
