BIMCO warns of increased risks to shipping in Middle East region
Chief Safety & Security Officer at BIMCO, Jakob Larsen, issued a warning about increased risks to shipping after the outbreak of hostilities in the Middle East over the weekend, saying as follows:
The US/Israeli attack on Iran dramatically increases the security risk to ships operating in the Persian Gulf and adjacent waters. Ships with business connections to US or Israeli interests are more likely to be targeted, but other ships may also be targeted deliberately or in error.
Ships already in the area are expected to seek refuge in territorial waters of neutral States in the area such as United Arab Emirates or Qatar, and some ships may also want to try to leave the area entirely. Ships underway to the immediate conflict area are likely to stay away until the situation stabilises again.
How will the insurance market react?
We expect insurance rates to increase manyfold, and ships with business connections to US or Israel approaching the area are probably not going to be able to get insurance.
Can Iran close Strait of Hormuz?
The Iranian naval forces have capabilities designed to disrupt shipping in and out of the Persian Gulf. In the short term it is assessed that Iran will be able to coerce commercial shipping to decide against entering the conflict area.
It is assessed that within few days US air and naval superiority will eventually establish a level of security which will enable commercial shipping to resume transportation in and out of the Persian Gulf and adjacent waters.
How will the Houthis respond?
The Houthis are allies of Iran and may well decide to ramp up attacks against commercial shipping in the Red Sea and Gulf of Aden. This will constitute a considerable security threat especially to ships with commercial ties to US and/or Israel. Other ships may also be targeted deliberately or incidentally. Following the previous Houthi campaigns against commercial shipping, maritime traffic through the Red Sea is far from pre-conflict levels. The current outbreak of hostilities exacerbates security threats to ships in the Red Sea and Gulf of Aden and will most likely cause some shipowners to reroute south of Cape of Good Hope. Others will still decide to go through in dialogue with their insurers and following a ship- and voyage specific assessment of associated security risks.
What has the US authorities advised shipping to do?
The US has established a maritime warning zone in the Persian Gulf, Gulf of Oman, North Arabian Sea, and the Strait of Hormuz to protect against inadvertent targeting of neutral shipping. Commercial shipping is advised to navigate with caution and avoid navigation within this zone, if possible. This maritime warning zone is not intended to impede neutral or merchant shipping. Those vessels are free to navigate international waters. However, the establishment of the warning zone is intended to provide notice that dangerous military operations are taking place from within these locations and the U.S. Navy cannot guarantee the safety of neutral or merchant shipping.
Separately, a Dubai-based Partner at law firm Stephenson Harwood, Menelaus Kouzoupis, has commented on the impact on global shipping following the escalating tensions in the Middle East as follows:
“While the Straits remain legally open to international navigation, the sudden escalation in the conflict has materially altered the risk landscape for commercial shipping. As a result, the high-risk environment may well justify a vessel’s refusal to transit. Additionally, the reassessment of war risks by underwriters will lead to significant war premium uplifts and potentially loss of cover.
“Owners and charterers should closely monitor the situation and review their risk assessments based on contemporaneous updates and engage early on with their insurers and obtain legal advice before considering transit through the Straits.”