Multiple commercial vessels are anchored off the coast of the UAE. Due to the impact of US-Iran conflict, super-tanker freight rates in the Middle East have surged to their highest level in history, causing chaos in the strategic Strait of Hormuz. The sudden deterioration in security has disrupted key regional shipping lanes, prompting several major marine war risk insurers to begin canceling insurance coverage for vessels in the Persian Gulf. According to data from London Stock Exchange Group (LSEG), the benchmark rate for Very Large Crude Carriers (VLCCs), capable of carrying 2 million barrels of crude oil, on the Middle East-to-East Asia route reached a record peak of $423,736 per day on Monday, a surge of over 94% from Friday's closing rate. Following strikes by the US and Israel against Iran over the weekend, crude oil transportation costs have soared, alongside significant increases in oil and gas prices. The escalation of conflict has brought shipping through the Strait of Hormuz – a vital global oil chokepoint located between Oman and Iran – to a near standstill. According to Iranian state media, a senior official from Iran's Revolutionary Guards claimed on Monday that the Strait of Hormuz had been blocked, warning that any vessel attempting to pass would be attacked. However, US Central Command later denied this claim via Fox News. In an email, Hill Bhattacharyya, Head of European Freight at Argus Media, stated: "Although the waterway is not formally closed, a series of events has elevated the threat level around the Strait of Hormuz, leading charterers of VLCCs to withdraw from the market and avoid signing new charters." Citing market sources, Bhattacharyya noted that Middle Eastern oil producers have not announced production halts or stopped loadings, with ports in the UAE, Oman, Kuwait, and other countries still operational. "However, most shipowners are already avoiding transits through the Strait of Hormuz after insurers canceled war risk coverage for vessels in parts of the region." According to Argus Media statistics, approximately one-third of global seaborne crude oil trade, 19% of liquefied natural gas (LNG) trade, and 14% of refined product trade pass through this strategic channel. "Double Blow" In recent days, multiple vessels transiting the Strait of Hormuz have been attacked, leading major global marine insurance providers to cancel war risk coverage for vessels in the Middle East. Institutions including the American Club, Gard, Skuld, the UK P&I Club, and the London P&I Club have all announced they are ceasing to provide coverage. Adrian Beciri, CEO of Cyprus-based bulk logistics company DUCAT Maritime, stated that the ripple effects of the Middle East conflict are spreading globally. "We were trying to charter a bulk carrier to transport food like rice to West Africa, on a route passing the Cape of Good Hope. You would think it's far from the conflict zone. But we couldn't secure a vessel in the end. Someone offered a price 50% above normal to transport coal from Indonesia to India's west coast. Why are freight rates so high? Because shipowners are uncertain about securing cargo in the Persian Gulf region." "The impact is extremely broad; it could be a double blow. If the Strait of Hormuz were truly closed, coupled with the ongoing disruption to the Suez Canal by the Houthis, the consequences would be severe – similar to the pandemic period and the attacks back then." Shipping Giants Reroute Even a temporary inability for tankers to pass through the Strait of Hormuz would push up global energy prices, increase shipping costs, and cause significant supply delays. The Strait of Hormuz is also a critical passage for global container trade, with ports like Jebel Ali and Khalifa being key global transshipment hubs. Major shipping lines, including MSC, Maersk, Hapag-Lloyd, and CMA CGM, have issued updated guidance, prioritizing safety as the security situation deteriorates. Maersk, seen as a barometer of global trade, announced on Monday the suspension of its special cargo services to and from the UAE, Oman, Iraq, Kuwait, Qatar, Jordan, Bahrain, and Saudi Arabia until further notice. The company had previously announced that all its Middle East-India to Mediterranean and Middle East-India to US East Coast services would be rerouted via the Cape of Good Hope.