Houthi Attacks Push Red Sea Insurance Costs Higher

Int’l Desk: War risk insurance premiums for ships transiting the southern Red Sea more than doubled for some companies on July 23 after Yemen’s Iran aligned Houthi movement attacked at least one tanker, according to industry sources cited by Reuters.

Indicative rates for those voyages rose above 1 percent of a vessel’s value, up from around 0.75 percent on July 21 and 0.3 percent the previous week. Quotes for certain Saudi linked ships and vessels calling at southern Saudi ports climbed as high as 3 percent.

Even small increases of this sort can add hundreds of thousands of dollars to the cost of a typical seven day voyage.

The surge followed Houthi claims of missile and drone strikes on two Saudi oil tankers, the Encelia and the Layla, which the group said were carried out in response to alleged violations of a Saudi imposed maritime blockade.

Maritime security sources confirmed an attack on the Encelia off the coast of Jizan near the Saudi Yemeni border. Reuters could not immediately verify the second incident, though United States President Donald Trump referred to attacks on two Saudi tankers.

The Houthis had announced a naval blockade against Saudi Arabia on July 20, raising risks for commercial traffic near the Bab el Mandeb Strait.

A Saudi led coalition responded the next day with steps intended to protect shipping in the area.

Premiums for vessels sailing from more northerly Saudi Red Sea ports such as Jeddah and Yanbu remained lower, around 0.1 percent, given their greater distance from the current risk zone.

The latest move continues a pattern of swift market reaction to developments in the region. Rates had already edged higher earlier in the week after the blockade declaration itself.

Shipping operators and underwriters are monitoring the situation closely as the southern Red Sea stays a vital route for global trade.