War-risk insurance for tankers linked to Saudi Arabia’s Red Sea ports has jumped sharply in recent weeks, according to a September 24 Reuters report, at the same time landlocked Ethiopia continues to depend on the Djibouti corridor that reaches the open sea through those same Red Sea approaches. A war-risk premium is the extra insurance cost shippers pay when a voyage runs through waters where war or missile attacks make damage or loss more likely. Reuters said quoted war-risk premiums for Saudi-linked tankers calling at Yanbu rose to around 3 percent of a vessel’s value, up from less than 1 percent in early July, after London’s marine insurance market designated that stretch of water as high-risk following attacks near the Bab el-Mandeb strait by Yemen’s Iran-aligned Houthi movement.
For ports south of Yanbu, including Jizan near the Yemen border, quoted premiums that were around 1 percent in early July can rise as high as 7 percent, almost as much as transits through the Strait of Hormuz, where premiums range between 6 and 9 percent, four industry sources told Reuters. Tankers moving through the Red Sea without a Saudi connection typically pay between 0.2 and 0.3 percent, the same sources said. Pankaj Khanna, chief executive of shipping group Heidmar Maritime Holdings, told Reuters it can be easier to use Hormuz right now because the United States provides some cover there, while in the Red Sea there is nothing comparable for Saudi-linked vessels. Heidmar is avoiding Saudi ports while remaining active in both Hormuz and the Red Sea, he said.
Saudi Arabia earlier used its East-West pipeline to divert around 4 million barrels per day to the Red Sea after Iran constrained Gulf exports via Hormuz from March, Reuters reported. The kingdom shut that pipeline on September 11 after drone attacks that it said came from Iraq, and loadings at Yanbu had not resumed when Reuters published, according to industry sources, satellite images and shipping data. The Houthis, who seized stretches of the Yemeni coast and captured Perim Island in the middle of Bab el-Mandeb this month, have vowed to target vessels linked to Saudi Arabia because of Riyadh’s backing of Yemen’s government, Reuters said. Saudi Arabia intercepted six ballistic missiles fired by the Houthis toward areas including Yanbu, according to the Saudi-led coalition cited in the same report.
Those insurance numbers are not an abstract shipping story for Ethiopia. Almost all of Ethiopia’s seaborne imports and exports still move through Djibouti and then through Red Sea approaches that insurers are repricing as war danger rises. When tanker and cargo insurance becomes more expensive, the cost does not stay at the quay. It can show up later as dearer fuel, delayed containers, and higher prices for factories and households that never see a war-risk quote sheet. Corey Ranslem, chief executive of maritime security group Dryad Global, told Reuters that Bab el-Mandeb transits remained challenging, with tanker-only figures totaling only a handful of vessels per day, while what continues to move consists mainly of dry bulk cargo, certain products, and a limited number of tankers without Saudi affiliations.
Europe External Programme with Africa, or EEPA, recorded in its September 28 Horn situation report that General Abebaw Tadesse, deputy chief of the Ethiopian National Defence Forces, or ENDF, made statements about recapturing Assab in Eritrea to gain access to the Red Sea. Assab is a Red Sea port that Ethiopia lost access to after Eritrea’s independence, and public talk of retaking it raises regional stakes while commercial insurers are already treating Saudi-linked Red Sea loadings as high-risk. EEPA’s field update also described fighting in Afar Zones 1, 2 and 4 and the capture of Abala and Erebti by troops affiliated with the Alliance for Survival, geography that sits near routes connected to the Djibouti corridor. Al Jazeera’s September 29 explainer likewise warned that an Afar offensive could threaten supply routes from Djibouti through which most Ethiopian imports, including fuel, pass.
Field Marshal Berhanu Jula, ENDF chief of general staff, has accused Eritrea, Sudan and Egypt of financing and supporting Alliance for Survival groups, EEPA reported, while Sudan rejected that claim. Those accusations and denials are political statements, not insurance market data, but they sit in the same news week as Reuters’ premium spike and as Ethiopia’s continued dependence on one foreign seaport corridor. Saudi Arabia has appointed the Saudi Reinsurance Company to lead a national marine war-risk insurance pool, Reuters reported, after the crown prince sought United States military help against the Houthis. The United States has provided some aerial support to ships sailing via Hormuz in recent months, sources told Reuters, but no such automatic protection exists in the Red Sea, where the European Union provides security and says it needs more ships.
War-risk premiums are usually quoted for short voyage windows and reviewed daily, Reuters noted, so a journey from Yanbu could cost millions of dollars in cover compared with far lower pre-war figures. Oil producers also pay high daily charter rates for tankers and bunker fuel during the voyage, according to industry estimates in the same report. Ethiopia does not load Saudi crude at Yanbu, yet it shares the same sea lane risk when cargo and fuel that serve the Horn must pass Bab el-Mandeb or wait for safer windows. Assab rhetoric from ENDF leadership, Afar fighting near Djibouti-linked routes, and soaring quoted insurance costs on Saudi Red Sea loadings together describe a corridor under commercial and political stress rather than a quiet bypass.
Readers who follow Ethiopian logistics therefore face two linked facts from this week’s open sources. Reuters documents a tripling of quoted war-risk cover for Saudi-linked Yanbu calls and premiums that can approach Hormuz levels south of Yanbu, while EEPA records senior ENDF language about Assab and Red Sea access as northern fighting continues. Neither source settles whether Ethiopia will gain a sovereign port, and neither source claims that Djibouti’s share of Ethiopian trade has suddenly collapsed. What they do show is that the water Ethiopia already uses to reach the world is pricing for war danger, and that official talk of Assab raises the diplomatic temperature around the same coastline.
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