War risk insurance costs rise as Houthi attacks threaten Red Sea shipping

War risk insurance premiums for shipping through the southern Red Sea more than doubled for some companies on July 23 after Yemen’s Iran-aligned Houthi movement attacked at least one tanker, according to sources cited by Reuters.

Indicative premiums for voyages through the southern Red Sea rose to more than 1% of a vessel’s value, up from around 0.75% on July 21 and 0.3% the previous week. Rates for some Saudi-linked vessels and ships calling at southern Saudi ports were reportedly as high as 3%.

Even small increases in war risk insurance can add hundreds of thousands of dollars to the cost of a seven-day voyage.

The increase came after the Houthis claimed missile and drone attacks on two Saudi oil tankers, the Encelia and Layla, in response to what the group described as violations of a Saudi-imposed maritime blockade. Maritime security sources confirmed an attack on the Encelia off the coast of Jizan, near the Saudi-Yemeni border. Reuters could not immediately verify the attack on the Layla, although US President Donald Trump referred to attacks on two Saudi tankers.

The Houthis declared a naval blockade against Saudi Arabia on July 20, potentially opening a new front in the wider regional conflict. On July 21, a Saudi-led Arab coalition announced measures to protect shipping through the Bab el-Mandeb Strait.

Insurance rates for vessels operating from northern Saudi Red Sea ports, including Jeddah and Yanbu, remained lower at around 0.1%, reflecting their greater distance from the current risk area.

By Sabina Mammadli