The escalation of the conflict in the Middle East has placed the Strait of Hormuz — through which about a fifth of the world’s oil passes — at the center of global market attention.
With attacks on vessels, retention of ships and increasing risk to navigation, maritime insurers began to cancel coverage against war risks or suspend new policies for operations in the region.
The decision, foreseen in the contract, already increases logistical costs and could impact the end consumer.
What is happening in the Strait of Hormuz?
Located between Iran and Oman, the Strait of Hormuz is a strategic corridor through which around 20% of the world’s oil and gas flow passes.
But since the start of clashes in the region, on February 28, with the attacks by the United States and Israel against Iran, the region has seen a sharp reduction in maritime traffic and an increase in risk for vessels.
The data shows the dimension. According to a survey by the British maritime data company Lloyd’s List Intelligence, between March 1 and 11, 2025, more than 1,200 vessels crossed the strait. In the same recent period, there were only 77 crossings.
Furthermore, the risk environment has deteriorated rapidly. Since the beginning of March, at least 20 commercial vessels have reported attacks or incidents in the region, including oil tankers, according to the British agency UKMTO.
The International Maritime Organization (IMO) also confirmed multiple episodes involving energy transport ships.
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Why are insurers canceling coverage?
The withdrawal of coverage for marine vessels is a direct response to the abrupt increase in risk. In conflict regions, the probability of simultaneous and large-scale losses increases, which puts pressure on the financial capacity of insurance companies.
“In practice, insurers start to see the risk of severe and correlated losses: attack on the hull, cargo, crew, pollution, route blockage, vessel retention and multiple claims almost at the same time”, says Denis Teixeira, senior vice-president of Transport and Logistics at Alper Seguros.
In the opinion of Tatiana Algodoal, partner in the consultancy area at Schalch Sociedade de Advogados, specialist in insurance and reinsurance, attacks on vessels transform a risk previously considered only “potential” into something “concrete, current and of high severity”.
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“What differentiates the case of the Strait of Hormuz is the combination of factors: the speed of escalation, the systemic relevance of the route, the concentration of high-value assets, the existence of direct and public threats to navigation and the aggregate effect on insurers and reinsurers on a global scale”, he explains.
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Is cancellation a breach of contract?
Despite the economic impact, canceling insurance is not usually considered breach of contract, according to experts interviewed by the InfoMoney.
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“These contracts usually include specific clauses that allow insurers to review, suspend or cancel coverage upon prior notice. In other words, the possibility of cancellation is already part of the contractual architecture of this type of insurance.”
In practice, the central point is not whether the insurer can cancel, but whether the cancellation was made respecting the rules set out in the policy (insurance contract).
According to Algodoal, maritime insurance contracts incorporate standard international clauses — such as the Institute War Cancellation Clause — that authorize the cancellation of war coverage upon prior notice, normally 7 days or 72 hours. But it is only valid if the notice period is respected and coverage is maintained for risks already initiated before the effective date of cancellation.
“Shipments made before the notice came into effect remain covered. Shipments after the cancellation date are not covered for war risks”, says Algodoal.
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How does this impact the Brazilian consumer?
Even far from the conflict, Brazil is not immune. The impact comes indirectly, via increased costs, experts say.
“Without war risk coverage, the ship does not sail, or only sails through costly and exceptional renegotiation, with economic and legal effects that end up affecting everyone involved in the maritime transport operation.”
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According to her, this movement tends to be reflected, firstly, in more expensive fuels, which is already happening.
This Tuesday (17), the Middle East crude oil benchmark indices reached historic records, becoming the most expensive in the world.
The price of Dubai oil was valued at a record US$157.66 (R$824.56) for May loading cargoes, S&P Global Platts reported, surpassing the all-time record for Brent barrel futures, the global benchmark, of US$147.50 in 2008.
Rodrigo Protasio, CEO of Gallagher Retail in Brazil and specialist in Major Risks, highlights that financial volatility and pressure on oil prices generate a cascade effect.
“Prolonged conflicts put pressure on the price of oil and increase energy costs, fueling global inflation. This impacts the insurance sector by increasing claims costs [ocorrência do risco previsto no contrato] and insured values”, he says.
Teixeira, from Alper, explains that when the insurance premium (amount paid by the customer to the insurance company when taking out protection) rises, the total cost of maritime transport also rises. “This transfer ends up being part of the Brazil cost and, in many cases, the final price to the consumer”, points out the specialist.
This increase in prices spreads throughout the production chain, affecting the cost of production and distribution of essential goods. For example: food becomes more expensive due to the increase in the price of fertilizers, energy and freight. Imported products, in turn, suffer adjustments resulting from higher logistics costs and less predictable deliveries.
“The effect is not limited to a specific sector, but reaches different segments of everyday consumption”, says Algodoal.
From the perspective of Leonardo Coelho, CEO for Brazil at Aon, the implications for energy and supply chains will depend heavily on duration and escalation.
“Any prolonged disruption starts to affect supply, puts increasing pressure on prices and creates downstream effects on global supply chains well beyond the region,” he says.
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