The cost of war-risk insurance for Saudi-linked oil tankers calling at Yanbu, Saudi Arabia’s main Red Sea port, has risen to around 3 percent of a ship’s value. Four industry sources told Reuters on September 24 that the rate was less than 1 percent in early July. For ports south of Yanbu, including Jizan near the border with Yemen, quoted premiums of around 1 percent in early July can now rise as high as 7 percent. That is almost as high as trips through the Strait of Hormuz, which range between 6 and 9 percent, the sources said.
Tankers crossing the Red Sea without any Saudi connection usually pay between 0.2 and 0.3 percent, the same sources said. Reuters noted that there is no public data on agreed rates, which could differ from the rates quoted by brokers and underwriters.
Reuters reported that Saudi Arabia had used its East-West pipeline to send around 4 million barrels of oil per day to the Red Sea after Iran limited Gulf exports through Hormuz from March. The kingdom shut that pipeline on September 11 after drone attacks that it said came from Iraq, where Iran backs some militia groups. Loadings at Yanbu had not yet resumed, according to industry sources, satellite images, and shipping data.
Pankaj Khanna, chief executive of Heidmar Maritime Holdings, told Reuters it was easier to work in Hormuz because the United States provides some cover there. “In the Red Sea, there’s nothing,” he said. “If you have a Saudi connection, then you have a problem.” Heidmar is avoiding Saudi ports while still working in both Hormuz and the Red Sea.
The Iran-aligned Houthis took large parts of the Yemeni coast and captured Perim Island in the Bab el-Mandeb strait this month. Reuters said they have vowed to target only ships linked to Saudi Arabia because Riyadh backs Yemen’s government. Corey Ranslem, chief executive of the maritime security group Dryad Global, said tanker traffic through Bab el-Mandeb was “only a handful of vessels per day.” He said what still moves is mainly dry bulk cargo, some fuel products, and a few tankers without Saudi links.
The Saudi-led coalition said the kingdom intercepted six Houthi ballistic missiles on Thursday, including some fired toward the Yanbu area. David Smith of the insurance broker McGill and Partners told Reuters, “We have seen rates certainly north of 7% for all calls south of Yanbu.”
War-risk insurance usually covers a seven-day period and is reviewed every 24 hours. Reuters said this can push the cost of one Yanbu trip to about $3 million. Calls at southern Saudi ports or trips through Hormuz can cost about $7 million, compared with at least $100,000 before the war.
African Security Analysis (ASA), a research group, published an assessment of the Bab al-Mandab strait on September 15. It said higher war-risk premiums, fewer available ships, changed schedules, and rerouting around Africa’s Cape of Good Hope can have many of the effects of a partial blockade. ASA said this can happen without the Houthis having to stop every ship.
ASA said Djibouti and Egypt face the most immediate exposure, and that Ethiopia faces significant indirect exposure because it depends on the Djibouti corridor. Its April 2026 assessment had warned that disruption could spread across African economies through higher freight, fuel, food, and commodity costs.
Ethiopian ministry figures for the 2025/26 financial year, reported by Birr Metrics in August, put Djibouti’s share of cargo through sea gateways at 96.7 percent. Fuel imports alone were 4.23 million tonnes.
Fighting in northern Ethiopia is also near the same corridor on land. Agence France-Presse (AFP) reported that the Tigrayan offensive in Afar is likely aimed at cutting supplies from Djibouti, which provides almost all of Ethiopia’s international trade cargo, including fuel.
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