Oil prices grabbed the headlines after Brent crude climbed nearly 4% to $94.23 per barrel following an eleventh consecutive night of U.S. Central Command strikes against Iran. At the same time, Secretary of State Marco Rubio told ASEAN foreign ministers that Washington and Tehran remain divided over the Strait of Hormuz.
While the jump in crude prices has attracted most of the attention, there is another figure that may offer a far more meaningful indication of market risk.
The Insurance Market Is Sending a Stronger Signal
The key metric is the cost of insuring oil tankers travelling through the Strait of Hormuz. Unlike financial markets, where prices often react to speculation and shifting sentiment, marine insurers assess the probability of real-world losses.
Before the latest conflict escalated, war-risk insurance for a large crude carrier transiting the Strait of Hormuz typically cost around 0.25% of the vessel’s value. According to the Lloyd’s Market Association, those premiums have now risen to approximately 5%, representing an increase of almost 1,900%.
For a tanker valued at $100 million, that means insurance costs have climbed from roughly $250,000 to several million dollars for a single voyage.
Why War-Risk Premiums Matter More Than Oil Prices
Oil futures can rise or fall rapidly as headlines change or optimism around diplomatic progress emerges. Insurance premiums behave differently because they are based on insurers’ assessment of the likelihood that a vessel will actually be damaged.
When underwriters increase prices by nearly 1,900%, they are signalling that the physical risks facing commercial shipping have increased substantially. Their business depends on accurately assessing those risks rather than reacting to daily market sentiment.
That distinction makes insurance pricing an important indicator of how seriously industry specialists view the current security situation.
Shipping Risks Could Become a Supply Problem
With military operations continuing for eleven consecutive nights and diplomatic negotiations showing little progress, insurers continue adjusting premiums on individual voyages.
Around one-fifth of the world’s seaborne oil and gas supplies pass through the Strait of Hormuz. If insurance costs continue to rise, some operators may determine that the route is no longer commercially viable regardless of freight rates.
Any reduction in tanker traffic through the waterway could quickly evolve from a shipping issue into a genuine supply disruption, increasing pressure on global energy markets and inflation.
Markets Are Reacting Beyond Oil
The implications extend beyond crude markets.
During the most recent comparable escalation, the S&P 500 declined 0.79%, while the Nasdaq lost 1.55% in a single trading session. At the same time, the yield on the U.S. 10-year Treasury moved higher rather than falling, suggesting investors were becoming increasingly concerned about inflation rather than simply seeking safe-haven assets.
That combination presents a more challenging environment for diversified portfolios because both equities and bond markets can come under pressure simultaneously.
Gold Has Not Behaved Like a Traditional Safe Haven
Gold has also delivered an unexpected response.
Instead of rallying during the geopolitical crisis, the metal has fallen by more than 20% since the conflict began in February. Expectations that the Federal Reserve could maintain a hawkish stance in response to energy-driven inflation have outweighed gold’s traditional appeal during periods of geopolitical uncertainty.
This suggests that investors relying solely on gold as protection against geopolitical shocks may face a more complicated environment than in previous crises.
Looking Beyond the Oil Price
Taken together, several markets are sending a consistent message. Brent crude has risen around 4%, war-risk insurance premiums through the Strait of Hormuz have increased by nearly 1,900%, equities have weakened alongside rising bond yields, and gold has failed to provide its usual defensive performance.
Viewed individually, each market tells a different story. Combined, they indicate that participants closest to the physical risks of global energy transportation are assigning far greater significance to current events than headline oil prices alone may suggest.