Rising Costs and Delays Hit UAE Oil Shipping Amid Hormuz Tensions

Mar 3, 2026

81 min

Mar 3, 2026 00:31

Oil shipping, insurance costs spike as Hormuz tensions test UAE trade routes

## Increased Freight and Insurance Costs

Tensions in the Strait of Hormuz have led to a significant rise in oil shipping and insurance costs, impacting the UAE's trade routes. The conflict between Iran and the US has disrupted this crucial maritime corridor, causing freight rates to soar. For instance, South Korea's Sinokor is now charging around $20 per barrel for transporting Middle East crude to China, a sharp increase from last year's $2.50.

## Shipping Delays and Vessel Congestion

The situation has resulted in numerous vessels being anchored in the Gulf, with at least 150 tankers, including crude and LNG carriers, waiting beyond the strait. The US Navy has warned of increased naval presence and potential congestion near anchorage areas, although no formal suspension of traffic has been announced.

## Insurance Market Volatility

Insurance costs have also surged, with war risk premiums expected to rise by up to 50%. This means a significant increase in costs for vessels transiting the Gulf, potentially reaching $375,000 per voyage for a $100 million ship.

## Impact on Global Trade

The UAE, a major OPEC producer, relies heavily on Hormuz for its exports. While it has some alternatives, such as the Habshan-Fujairah pipeline, most regional exports still pass through the strait. The disruption threatens not only energy shipments but also container flows, affecting ports like Jebel Ali and Khor Fakkan.

## Broader Economic Implications

Analysts warn that even short-term disruptions could lead to higher global oil prices, potentially exceeding $100 per barrel. The UAE's role as a trade hub means it could face increased energy prices and inflationary pressures if the situation persists.

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