Indicative war risk premiums rose to around 0.75% of the value of a ship, from around 0.3% on Friday before the Houthi announcement, according to the sources, who declined to be identified due to the sensitivity of the matter.
LONDON: The insurance cost of shipping goods through the Red Sea rose on Monday after Yemen’s Iran-aligned Houthis said they were imposing a naval blockade on Saudi Arabia, escalating risks for merchant shipping, insurance industry sources said.
The move by the Houthis opens a new front against the United States in its war on Iran and widens the threat to global energy supplies and trade beyond the Gulf.
Indicative war risk premiums rose to around 0.75% of the value of a ship, from around 0.3% on Friday before the Houthi announcement, according to the sources, who declined to be identified due to the sensitivity of the matter.
Even a small change will mean hundreds of thousands of dollars in extra costs for a seven-day voyage.
It is not clear how the Houthis would carry out a maritime blockade of Saudi Arabia, its northern neighbour along the Red Sea coast, or whether it would include a return to attacks on shipping.
Saudi state oil giant Saudi Aramco, the world’s largest oil exporter, has increased use of the Yanbu terminal, in the Red Sea since the U.S.-Israeli conflict with Iran began on February 28.
Saudi Arabia-flagged, owned or operated vessels, vessels en route to or from Saudi Arabia and Saudi Arabia’s Red Sea ports were assessed at high risk of a Houthi attack, British maritime security company Ambrey said on Monday.
“The Houthis made mistakes during the (2024) Red Sea crisis in targeting shipping with out-of-date affiliations to companies. It is likely that vessels could be targeted for mistaken identities,” Ambrey said.
The full closure of the Bab el-Mandeb strait, the southern gateway linking the Red Sea to the Gulf of Aden, would halt Saudi oil exports to Asia and could reduce global oil supply by 7%.
Red Sea traffic has not fully recovered since Houthi attacks off Yemen’s coast began in November 2023 in what the group said was solidarity with Palestinians in the Gaza war.