War-risk insurance premiums for tankers transiting the Strait of Hormuz collapsed 72% in three days following Wednesday's first Saudi convoy passage, falling from a wartime peak of 1.20% of vessel value to roughly 0.34% in fresh quotes from London-based marine underwriters. The plunge restored shipping economics through the world's most critical oil chokepoint to near-normal levels for the first time since the November Iran-Israel escalation.
Joint Maritime Information Center data confirmed 18 tankers carrying approximately 28 million barrels of crude have successfully transited the strait since Wednesday, with another 24 vessels queued for passage over the next 96 hours. Saudi Aramco, Kuwait Petroleum, Iraq's SOMO and Qatar Energy have all resumed normal shipping schedules.
Lloyd's, Munich Re Re-Rate Risk
Lloyd's of London, which provides coverage for an estimated 38% of global tanker traffic, lowered its standard Persian Gulf war-risk additional premium to 0.34% from 0.78% effective Friday. Munich Re and Hannover Re each followed with similar reductions Saturday morning, citing what Munich Re's underwriting head Stefan Golling called "a meaningful normalization of geopolitical risk in the corridor."
The reduction translates to roughly $440,000 in saved premium per VLCC voyage, restoring approximately $1.20 per barrel of cargo economics that had been absorbed by either shipowners or refining customers depending on contract terms. For Saudi Aramco, which moved 1.4 million barrels through the strait Wednesday and Thursday alone, the resumption represents an effective $1.7 million in daily added cargo margin.
Tanker Spot Rates Reset Lower
For tanker companies, the rapid normalization is a double-edged sword. While insurance and bunker fuel costs have fallen, spot freight rates surged in March to multi-decade highs as charterers paid premiums for routes around the Cape of Good Hope. Frontline, Euronav and DHT Holdings each saw shares trade 6% to 9% lower in Friday's session as charter rates began to compress, and Sunday electronic markets pointed to further weakness on Monday.
Refining margins, however, are positioned for sharp expansion. Marathon Petroleum, Valero Energy and Phillips 66 all stand to benefit from the combination of lower crude transport costs and continued strength in U.S. gasoline demand heading into the May 26 Memorial Day weekend. The Gulf Coast 3-2-1 crack spread closed Friday at $19.40 per barrel, the highest level of 2026.