If and when peace returns to the Persian Gulf, and more specifically the conflict-cauterised Strait of Hormuz, will it result in a reset that at least resembles trade conditions prior to February 28, when the missile madness started?
Michael Harris, technical analyst at EBC Financial Group in London, has his reservations.
“The war will end – the economy it created will not.”
Harris writes that five weeks of conflict have redrawn how oil moves, how governments fund themselves, how nations settle payments and how trade is insured – a major impact on carriers, cargo agents and ultimately their clients.
“Before the war, shipping insurance premiums for Hormuz transits sat at 0.125% of vessel value. During the crisis, premiums surged above 10%, and several insurers withdrew coverage entirely. Post-war premiums will not return anywhere near pre-war levels,” Harris says.
“The precedent has been set: Hormuz has been demonstrated as a chokepoint that can be closed for weeks, not just threatened. Industry analysts project post-war premiums stabilising between 1% and 2% of vessel value, a permanent repricing that flows into the cost of every commodity shipped through the Gulf.”
- Harris provides a more detailed perspective in an opinion piece in our “Columns” section.
