When the first Houthi strikes resumed on February 28, 2026, our operations desk fielded more calls in 72 hours than we normally see in a month. Shippers wanted one thing: clarity. Which routes are still viable? Who is still writing war risk coverage? What does a cargo owner actually do when the world's most critical chokepoint becomes a live conflict zone again? We have been coordinating ocean freight through the Persian Gulf and the Strait of Hormuz for years, and this guide is the most direct answer we can give you right now, based on confirmed facts, not speculation.

What Changed in the Strait of Hormuz Since February 2026

The Strait of Hormuz is a 21-nautical-mile-wide passage between the Omani coast and the Iranian shore. Roughly 20 percent of the world's oil supply and a significant share of containerised and breakbulk cargo moves through it. When conditions deteriorate, there is no option that is both fast and simple, every alternative costs time, money, or both.

The sequence of events since late February 2026 broke down like this:

  • February 28, 2026: Houthi attacks on commercial shipping in the Red Sea and Gulf approaches resumed, following a US and Israeli strike on Iranian targets. The resumption was immediate and large-scale, not a gradual escalation.
  • Within 48 hours of the first February strikes: war risk premiums on the spot market rose roughly fivefold, and they kept climbing as the strait deteriorated.
  • March 5, 2026: P&I clubs including Gard, West of England, and the Japan P&I Club cancelled war risk cover for Iran and the Persian and Arabian Gulf, effective 00:00 GMT. This was a hard stop, not a market signal: vessels that kept transiting did so outside their standard liability layer.
  • March 2026: S&P Global reported the strait was effectively closed to commercial shipping, and Bloomberg put war risk pricing at around 5 percent of vessel value, roughly five times the level of the first days of the war, a near-$5 million bill on a $100 million tanker per transit.

That speed matters operationally. By the time a freight buyer learned that their vessel had entered a newly elevated-risk zone, the pricing had already reset. Shippers who had not pre-positioned contingency coverage found themselves either exposed or paying emergency-rate premiums with no negotiating room.

By March the strait was, for practical purposes, shut. S&P Global reported it effectively closed to commercial shipping, and Allianz estimated that roughly $125 billion of ships and cargo were caught in the strait when it closed. Hapag-Lloyd reported an extra $40 to $50 million a week in costs, with some of its vessels stranded inside the Gulf. So the constraint became twofold: insurance turned both punishingly expensive and, on the liability side, cancelled outright, while shipowners and masters were declining the passage on crew and vessel safety grounds. Neither problem was a substitute for solving the other.

The broader context is that the Strait of Hormuz was already on elevated watch lists in late 2025. The February 2026 escalation converted a theoretical risk into an active, priced-in operational constraint, and then into a security decision. Securing an insurance certificate, where one can still be placed, does not by itself secure a sailing.

The Insurance Picture: What Shippers Need to Know Right Now

Insurance is where the February 2026 escalation hit shippers first and hardest in cash terms, alongside the security risk that has kept most traffic out of the strait altogether. Here is what we know from confirmed market sources.

P&I Cover: The Core Problem

P&I insurance covers third-party liabilities, crew claims, pollution, cargo liability to third parties, collision. War risk cover under it was cancelled for Iran and the Persian and Arabian Gulf effective 00:00 GMT on 5 March 2026, with clubs including Gard, West of England, and the Japan P&I Club issuing notices. A vessel operating outside valid P&I in a listed war zone is a real problem: port authorities in some jurisdictions will refuse entry, letters of credit may not be honoured, and charterers face personal exposure.

This is not simply a cost issue, it is a legal and commercial eligibility issue, and it is a large part of why so many operators stopped transiting rather than sail uncovered. Some specialty carriers can place Additional War Risk P&I cover to fill the gap, and it is worth asking your broker about, but it is not universally available. Before you commit to a Hormuz transit, get written confirmation of exactly what liability cover the vessel carries for the Gulf, because "we are working on it" is not cover in force.

Hull War Risk and Additional War Risk Premiums

Hull war risk insurance, covering the vessel itself, remained available through Lloyd's of London, which confirmed that war risk insurance for the Hormuz corridor continued to be written, but at sharply elevated premiums. Lloyd's has historically been the market of last resort for hard-to-place risk, and this role held in 2026.

Howden Re reported in March 2026 that war risk capacity had been reinstated across several key carriers, meaning coverage was available, but at prices that had stabilised at a level well above the pre-escalation baseline. "Stabilised" in this context does not mean cheap; it means the emergency rate spike had found a floor, not reversed.

Put numbers on it. Bloomberg put Hormuz war risk at around 5 percent of vessel value at the peak, roughly five times the level of the first days of the war, which translates to a war risk bill near $5 million for a single $100 million tanker on one transit. Underwriters price the memory of recent losses, not just today's conditions, so plan for this elevated band to persist for months rather than for a quick reversion.

War Risk Premiums: The 2026 Trajectory

  • Pre-February 2026: war risk at baseline market levels, a small fraction of one percent of vessel value
  • 48 hours after February 28: a roughly fivefold spike in spot war risk premiums
  • By March, strait effectively closed: around 5 percent of vessel value at the peak (Bloomberg), about five times the early-conflict level; cover available through Lloyd's but expensive (Howden Re reported some stabilisation)
  • P&I war cover: cancelled in the Gulf from 5 March 2026 (Gard, West of England, Japan P&I Club)

Government Backstop: Announced, Not Operational

As private capacity tightened, a roughly $40 billion US government war risk facility, routed through the Development Finance Corporation, was floated as a fix. In practice it did not function: as of mid-2026 not a single policy had been written under it, and the broader question of a public backstop for these lanes was still open at EU level after a European Parliament question in March 2026. State-backed war risk schemes are not unprecedented, they operated during World War II and have been deployed selectively since, and they typically carry conditions on vessel flag, cargo type, and destination that private cover does not impose. But the practical lesson from 2026 is not to plan around a state scheme that may never issue a policy: the cover you can actually rely on is still the commercial market.

What Marsh Recommends: The Three-Pillar Framework

Marsh, a global insurance broker with direct market access to Lloyd's and other war risk carriers, articulated three methods for building freight resilience in elevated-risk corridors: alternative route planning, maintaining insurance buffers above minimum coverage requirements, and supply chain diversification to reduce dependence on any single chokepoint. In our experience coordinating freight through multiple high-risk lanes simultaneously, these three approaches work together, not as alternatives to each other.

Can the Strait of Hormuz Be Bypassed? Route Alternatives

Yes, the Strait of Hormuz can be bypassed, but the alternatives involve real trade-offs in time, cost, and cargo type compatibility. There is no equivalent fast lane.

Aerial view of an oil tanker docked at a loading terminal

Cape of Good Hope (Cape Route)

The most widely used diversion for Asia-Europe traffic that would normally transit Suez and the Red Sea, or in cases where Gulf loading or discharge requires bypassing Hormuz entirely, is the Cape of Good Hope routing around the southern tip of Africa.

  • Additional distance: approximately 3,500 nautical miles versus the Hormuz/Suez corridor
  • Additional transit time: 10 to 14 days depending on vessel speed and port sequence
  • Additional cost: approximately $200 to $400 per TEU in additional bunker and port cost

For many shippers, the Cape routing became the default as early as late 2023 during the initial Red Sea disruptions. By 2026, Cape routing is not a novelty, vessel operators have the experience and bunker arrangements in place. The cost is known and predictable, which is more than can be said for war risk premium spikes.

The Cape route does not solve every problem. For cargo loaded or discharged at Gulf ports, Qatar, UAE, Kuwait, Bahrain, Saudi Arabia east coast, bypassing Hormuz entirely may require transshipment at a hub outside the Gulf (Jebel Ali is inside the Gulf; Salalah in Oman sits outside the strait, making it a transshipment option for some commodities).

Land Bridge and Pipeline Options

For certain commodity types, particularly hydrocarbons, land-based alternatives exist. Saudi Arabia operates the East-West Pipeline (Petroline) connecting its Eastern Province fields to Yanbu on the Red Sea, with capacity to move crude oil without passing through Hormuz. For containerised or general cargo, this pipeline option is not relevant.

Overland routing through Turkey, Iran, and Central Asian corridors exists for specific cargo types and origins, but transit times, political complexity, and infrastructure constraints make this a specialist decision rather than a standard contingency.

Port Alternatives Within the Gulf

For shippers whose cargo must reach or depart Gulf ports, there is no simple workaround. Hormuz is the only maritime access to the upper Gulf. Some cargo can be transshipped, moved from a vessel outside the strait to a feeder service operating inside, but this adds handling, time, and cost, and depends on feeder availability.

When we arrange transshipment contingencies for Gulf-bound cargo, we typically evaluate Salalah (Oman), Sohar (Oman), and in some cases Colombo or Singapore for Far East cargo, each with its own feeder frequency and service constraints. Oman's role here has grown through 2026: a main-line vessel can discharge at Salalah or Sohar outside the worst of the listed zone, leaving only the shorter Gulf feeder leg in the high-risk area, which for the right commodity cuts the insured exposure more cleanly than a full Cape diversion.

Decision Framework: Should You Route Through Hormuz or Around It?

This is the question we work through with shippers most often right now. The answer is not the same for every shipment. Here is the framework we apply.

Factors That Favour Routing Through Hormuz

  • Origin or destination is a Gulf port with no cost-effective transshipment option
  • Cargo is time-critical and the 10–14 day Cape penalty is commercially unacceptable
  • Full war risk coverage (hull + P&I equivalent) can be secured at a total landed cost still below the Cape alternative
  • Vessel operator has confirmed war risk cover in place for the specific voyage

Factors That Favour Diversion or Delay

  • The vessel owner or master declines the transit on security grounds, which through 2026 kept most tonnage out of the strait entirely
  • War risk cover, where it can still be placed, runs near 5 percent of vessel value and P&I war cover has been cancelled, pushing total landed cost and liability exposure past the Cape alternative
  • Cargo value or type makes premium exposure prohibitive (high-value electronics, perishables where loss is total)
  • Shipper's own risk policy or customer contract prohibits war zone transit
  • Escalation is actively ongoing and vessel operators are imposing voluntary suspension

The Break-Even Calculation

In practical terms, the decision requires a three-way cost comparison: (1) Hormuz routing with full war risk premium uplift, (2) Cape routing with the $200–$400/TEU additional cost and 10–14 day delay, (3) delay-and-wait, holding cargo until conditions improve. None of these is free. The question is which cost is most acceptable given your contract terms, inventory position, and risk tolerance.

One factor shippers frequently underestimate is the delay cost. If your consignee has contractual delivery windows with penalties, a 14-day Cape diversion can trigger costs that dwarf the insurance premium. On the other hand, if your supply chain has buffer inventory and no hard delivery deadline, the Cape route is often the cleaner operational decision, lower exposure, no war zone complications, predictable transit.

How to Get War Risk Coverage in 2026 (Step-by-Step)

If you have decided that Hormuz routing is necessary and want to secure war risk cover, here is the process as it works in the current market.

  1. Confirm your vessel's existing cover status. Ask your carrier or shipowner for the vessel's current Institute War and Strikes Clauses (IWSC) hull coverage status and which clubs or underwriters are on risk. Do this before booking, not after. If the vessel operator cannot provide this confirmation in writing, that is itself a decision-relevant data point.
  2. Engage a specialist war risk broker. Standard marine insurance brokers may not have direct access to the Lloyd's syndicates and specialist carriers that are currently writing Hormuz war risk. You need a broker with demonstrable placement history in elevated-risk corridors. Names active in this market include Lloyd's coverholders and specialist London market brokers, ask explicitly whether they have placed Hormuz war risk since March 2026, and how much capacity they can actually assemble for the zone, since cover now has to be built syndicate by syndicate.
  3. Specify your cargo and voyage precisely. War risk underwriters in 2026 are pricing individual voyages, not blanket annual facilities. You will need: vessel name and IMO number, cargo description and value, loading port, discharge port, expected transit date, and anticipated time in the listed war zone. Vague submissions get declined or overpriced.
  4. Address the P&I gap directly. P&I war cover for the Gulf was cancelled from 5 March 2026, so do not assume the vessel's liability layer is intact. Ask your broker about Additional War Risk P&I cover, a supplementary product some specialty carriers offer to fill exactly this gap, and get written confirmation of what liability cover applies to your voyage and zone. Without it, your third-party liability exposure is uncovered.
  5. Build the premium into your freight cost before committing. War risk premiums are charged on the vessel's insured value (hull) or cargo value, not per TEU. Budget for the current band, which Bloomberg put near 5 percent of vessel value at the peak, roughly a $5 million bill for a $100 million vessel on a single transit. Get the premium indication before finalising your shipper-consignee contract terms; a figure that looks manageable at cargo level can become significant for high-value project cargo.
  6. Do not bank on a government backstop. The headline state proposal of 2026, a roughly $40 billion US Development Finance Corporation war risk facility, never actually wrote a policy, and the EU-level question remained open. If a national scheme does happen to apply to your flag or cargo, treat it as a bonus to verify, not a plan to rely on; your national maritime authority or export credit agency is the contact point.
  7. Document everything and keep it current. War risk listed areas can be updated weekly or faster. Your underwriters may include cancellation clauses that allow them to revoke cover on short notice if the area escalates, the P&I circulars in this cycle cite 48 to 72 hours. Know your cancellation terms and have a contingency plan for what happens if cover is pulled mid-voyage.

What Freight Buyers Should Ask Their Carrier or Forwarder

If you are a freight buyer, not managing your own vessels, you are dependent on your carrier or freight forwarder to navigate this correctly. These are the questions that matter, and note that the order has changed since March: the operational questions now come first, because cover is the easier half of the problem to solve.

On Operational Readiness (Ask This First)

  • Is the shipowner and master actually willing to transit the strait under current conditions, or is the service quietly routing via the Cape regardless of what the booking says?
  • What security measures are in place for the transit, convoy timing, naval coordination, routing within the strait, hardening or armed guards where lawful?
  • What is the trigger that would make you suspend the transit mid-voyage, and who makes that call, the master or a shore-side desk?

On Insurance

  • Does the vessel operating this service have confirmed war risk cover for Hormuz transit, effective for my shipment date?
  • What is the P&I cover status for this vessel for Persian Gulf operations?
  • If war risk cover is suspended mid-voyage, what is the contingency, diversion port, delay, or cargo transfer?
  • Is the war risk surcharge quoted on my freight invoice a pass-through of actual cover cost, or a carrier margin item? Can you document it?

On Routing

  • What is your current routing for [loading port] to [Gulf discharge port]? Has this changed since February 2026?
  • If you are diverting via Cape, what is the revised transit time and how does this affect my delivery commitment?
  • Do you offer a service from a transshipment hub outside the Strait (e.g., Salalah, Sohar) using feeder vessels for the final Gulf leg?

On Contract Protections

  • Does your bill of lading or service contract include a war risk deviation clause? What rights does it give you versus the carrier?
  • If delivery is delayed due to war risk diversion, what is your liability for my consequential losses?
  • Is there a shipper right to cancel a booked shipment without penalty if war risk conditions make the original routing non-viable?

In our experience coordinating freight for buyers who have not asked these questions upfront, the gaps tend to surface at the worst moment, when a vessel is already en route and a decision needs to be made in hours, not days. Front-loading these conversations is the only way to avoid reactive decision-making.

FAQ

Q: Can Iran legally block the Strait of Hormuz?

A: Under the United Nations Convention on the Law of the Sea (UNCLOS), the Strait of Hormuz is an international strait subject to the right of transit passage, which all states are entitled to exercise regardless of the adjacent coastal state's wishes. Iran is a signatory to UNCLOS and is legally prohibited from blocking transit. Practically, however, Iran has repeatedly threatened closure and has the military capability to severely disrupt shipping through mining, anti-ship missile threat, or seizure of vessels under the pretext of legal action. The legal right to transit and the operational reality of transiting under fire are different things. Underwriters price the operational risk, not the legal position.

Q: Can the Strait of Hormuz be bypassed?

A: For most containerised cargo, the Cape of Good Hope diversion is the primary bypass, adding roughly 3,500 nautical miles, 10 to 14 days of transit time, and $200 to $400 per TEU in cost. For hydrocarbon cargo, Saudi Arabia's Petroline pipeline provides an overland bypass from the Gulf coast to Yanbu on the Red Sea. For cargo whose origin or destination is within the Gulf itself, there is no true bypass, the strait is the only maritime access to the upper Gulf. Transshipment at ports outside the strait (Salalah, Sohar) can reduce the number of vessels that need to transit, but does not eliminate Gulf-side feeder vessel exposure.

Q: Who insures ships in the Strait of Hormuz?

A: Under normal conditions, commercial vessels are covered by a combination of hull and machinery insurance (typically placed through Lloyd's of London or other marine markets) and P&I club membership covering third-party liabilities. In 2026 conditions, P&I war cover for Iran and the Persian and Arabian Gulf was cancelled effective 5 March 2026 by clubs including Gard, West of England, and the Japan P&I Club, so the liability layer is effectively absent and hull and war risk cover is being placed separately, through Lloyd's at sharply elevated premiums (Bloomberg put it near 5 percent of vessel value at the peak). A roughly $40 billion US government backstop via the Development Finance Corporation was announced but never wrote a policy, so the market is doing the work commercially.

Q: If war risk cover is available, why are so few ships transiting?

A: Because availability of cover and willingness to sail are two different decisions, and in 2026 both went against the strait. S&P Global reported it effectively closed to commercial shipping, P&I war cover was cancelled, and owners and masters were declining the passage on crew and vessel safety grounds. For a freight buyer, the practical takeaway is that securing an insurance certificate, where one can still be placed, does not secure a sailing: confirm operational willingness first, cover second.

At GetTransport.com, we have been working through elevated-risk routing decisions with cargo owners and freight buyers every week since late February 2026. The practical advice we give is consistent: do not assume your carrier has coverage sorted, do not assume an insurance certificate guarantees a sailing when the master may still decline on security grounds, and do not assume conditions in three weeks will look like conditions today. The Strait of Hormuz situation is moving, and freight planning has to move with it. If you need help evaluating routing options or understanding what insurance documentation your shipment requires, our operations team works through exactly these questions. Get in touch before you book, not after the vessel sails.