US$125Bn of cargo stuck behind the Strait of Hormuz

A new report indicates that cargoes valued at approximately US$125Bn are stuck in the Persian Gulf, as the Middle East conflict has trapped some 1,150 cargo ships behind the Strait of Hormuz.

The report from Allianz Commercial notes that despite an agreement between the US and Iran, commercial traffic remains at well below pre-war levels, when as many as 140 ships passed daily through the Strait.

The report by the marine insurer comes as the International Maritime Organization (IMO) and the Sultanate of Oman have devised an evacuation framework to allow the safe passage of 11,000 seafarers who have been trapped in the Gulf for months.

The Middle East conflict has shed a spotlight on shipping’s vulnerability to global maritime chokepoints and black swan incidents driven by geopolitics, trade wars, and regional conflicts.

Allianz said marine insurance cover has been available throughout the conflict, albeit at increased hull and cargo premiums. But it noted that the real issue for shipowners “has been more about the risk to the crew and the vessel when transiting a conflict zone, rather than pure insurance considerations.”

Thomas Lillelund, chief executive of Allianz Commercial, summed it up, saying, “The Middle East conflict and Strait of Hormuz closure is just the latest in a series of severe interruptions to hit shipowners and cargo operators. Resilience, geopolitics, and efficiency must be balanced in an increasingly unpredictable world, where the cost of uncertainty is reshaping the shipping industry.”