According to sources from at least two major oil tanker companies, their fleets have not yet resumed transits through the Red Sea, pending approval from their insurance providers. This suggests that despite the ceasefire agreement, reports S&P Global.
Consultations With Insurance Companies
Shipping companies will be consulting with insurance companies to determine the validity of their coverage when transiting the Suez Canal.
One source indicated that the insurance premium for Suez Canal transits should not significantly increase compared to the Cape of Good Hope route. Another source confirmed that their company is currently not making Red Sea transits. Cargo insurance premiums have remained unchanged since the recent Israel-Hamas ceasefire agreement.
Despite the ceasefire, the Red Sea remains categorized as a high-risk area by the Lloyd’s Joint War Committee. While the Lloyd’s Joint War Committee provides guidelines, the actual premium values are determined by individual insurance companies through negotiations with shipping counterparts. Tanker freight rates have declined since the Houthi rebels announced a halt to attacks on most ships.
The Platts-assessed Persian Gulf-UK-Continent LR2 route, which was assessed at $4.225 million on January 17th, has since dropped by 10%. Most brokers anticipate further declines in freight rates in the near term. The reported release of the crew of the vessel is viewed as a positive step towards restoring confidence in the maritime industry.
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Source: S&P Global
