The latest
Major insurers at Lloyd’s of London have told brokers they will exclude vessels with any “Saudi touchpoints” from war-risk cargo coverage in the Red Sea. The restrictions may include foreign-flagged ships that previously called at Saudi ports.
The decision follows Houthi attacks on the Saudi-flagged tankers Encelia and Layla. The Iran-backed group has warned that vessels calling at Saudi ports could be targeted anywhere within its operational reach.
The Red Sea has become increasingly important to Saudi exports as the East-West pipeline moves crude to Yanbu while Hormuz remains largely closed. The route can handle up to 5 million barrels a day, compared with Saudi Arabia’s prewar exports of roughly 7 million barrels a day.
Details
- Existing policies: Some insurers are preparing to cancel current coverage for certain Saudi-linked vessels.
- Market response: Ascot and Navium told brokers they were preparing to withdraw policies after the latest tanker attacks.
- Higher-risk category: Underwriters may begin treating Saudi-linked ships like vessels connected to Israel, the U.S. and the UK.
- Longer voyages: Some ships carrying Saudi cargoes have turned back to sail through the Mediterranean and around the Cape of Good Hope.
- Dark transit: The Greek-owned Merbabu and three tankers operated by Saudi shipping group Bahri appear to have switched off their tracking signals.
- Selective blockade: The Houthis deny closing Bab el-Mandeb, describing their operation as a naval blockade targeting only Saudi Arabia.
Between the lines
The insurance restrictions could disrupt Saudi exports even without a complete Houthi closure of Bab el-Mandeb. If underwriters refuse coverage, shipowners may avoid the route regardless of whether their vessels can physically cross it.
What to watch
The availability of insurance will depend largely on whether Houthi threats and attacks continue. Prolonged restrictions could force more Saudi cargoes onto longer routes, increase freight costs and place additional pressure on global oil supplies.
