Strait of Hormuz shipping disruption to last months due to mine clearing

Normal shipping operations through the Strait of Hormuz are anticipated to face disruptions lasting several months, primarily due to approximately 80 mines that are currently blocking the main transit route, as reported by Intertanko. While some vessels have commenced transiting the strait, the persistent navigational hazards and the possibility of further disruptions underscore the significant challenges impacting global trade.

In an effort to mitigate these risks and support global commerce, Lloyd's of London, in collaboration with Chubb as the lead underwriter, has introduced a new $400 million war risk insurance facility. This initiative is designed to provide essential insurance capacity for vessels and cargo traversing the Strait of Hormuz, particularly in the wake of a peace deal between the US and Iran.

Simultaneously, Iran's Strait of Hormuz authority has decided to waive planned passage fees for a period of 60 days. This waiver aligns with ongoing technical negotiations between the US and Iran. During this 60-day period, all vessels intending to transit the strait are required to submit their transit requests at least 48 hours in advance. Iran has indicated its intention to implement the planned fees once this waiver period concludes.

The ongoing mine-clearing operations are expected to be a lengthy process, contributing to the projected months-long disruption. The presence of mines poses a direct threat to maritime safety and the free flow of goods through this critical chokepoint. The insurance facility aims to provide a financial backstop for shipowners and cargo holders, acknowledging the elevated risks associated with transit. The fee waiver by Iran, while temporary, offers a brief respite for shipping companies during a period of heightened geopolitical activity and operational uncertainty.