War-risk premiums for Saudi-linked tankers loading at Yanbu, Saudi Arabia’s main Red Sea oil port, have risen to about 3 percent of a vessel’s value, up from below 1 percent in early July, Business Insurance reported on October 1, citing Reuters. For ports further south toward Jizan, the same reporting said premiums have climbed from around 1 percent in July to as high as 7 percent. The jump follows the London marine insurance market’s decision to classify those waters as high risk after Houthi attacks near the Bab el-Mandeb strait.
Reuters reported on September 24 that Saudi oil export plans through the Red Sea face a fresh obstacle as insurance costs soar.
The Armed Conflict Location and Event Data Project, or ACLED, published a longer risk assessment on October 1 that helps explain why underwriters tightened. ACLED said Houthi territorial gains around Bab al-Mandab and renewed confrontation with Saudi Arabia have raised risks to Red Sea shipping, energy infrastructure and oil markets. Houthi forces advanced roughly 150 kilometres along the Red Sea coast in a week in September, capturing Mocha and reaching Bab al-Mandab, ACLED reported. That coastal shift strengthens their ability to watch the strait, launch operations and keep maritime logistics running with less local interference.
ACLED also said the Houthis have narrowed recent maritime targeting toward vessels they define as Saudi-linked, while saying other shipping can pass if governments stay out of the fight. Between the July blockade announcement and late August, ACLED recorded attacks on ten commercial ships, most of them tankers, with at least six successfully struck. The pause in corroborated maritime hits after August 24 does not erase the insurance problem. ACLED’s most likely outlook still points to higher insurance, security or rerouting costs even when commercial traffic keeps moving, and to sustained risk for Saudi export routes in the Red Sea and around the Strait of Hormuz.
Saudi Arabia’s western export infrastructure has grown more important as disruption around Hormuz pushes crude toward Red Sea outlets such as Yanbu, ACLED noted. That same shift puts more Saudi-linked tanker traffic into the waters where premiums have jumped.
Most of Ethiopia’s seaborne imports and exports still move through Djibouti. Higher Red Sea war-risk cover can raise freight on cargo that still comes through that port.
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