Shipping on a knife-edge as missiles pound Iran and Israel

• No ships attacked directly
• Collision in Gulf of Oman
• Insurance and crew costs to rise

Shipping is continuing to move around the Middle East even as Iran and Israel exchange rocket and drone strikes and despite a collision between two tankers in the Gulf. But operators are expected to charge a premium as their insurance and crew costs increase, according to maritime experts and lawyers.

Early on Tuesday, reports emerged that multiple ships were on fire in the Gulf of Oman. Two crude oil tankers – Adalynn, registered in Antigua Barbuda, and Front Eagle, registered in Liberia – collided overnight on June 16, according to data service MarineTraffic.

However, no Iranian involvement was detected. Ambrey, a British maritime security consultancy, has said the collision was “not security-related”, according to Al Jazeera.

Tankers collide in Gulf of Oman 

A collision between the crude oil #tankers Adalynn and Front Eagle occurred at 21.14 UTC on 16 June near the Khor Fakkan anchorage.
According to #MarineTraffic data, the Liberian-flagged Front Eagle was laden and headed for Zhoushan, China.… pic.twitter.com/js8E0tXeT7

— MarineTraffic (@MarineTraffic) June 17, 2025

Electronic interference with commercial shipping has surged since the first missile and drone strikes last week around the Strait of Hormuz and the wider Gulf, according to operators.

“There is currently no indication that Iran will seek to disrupt shipping in the Gulf, and no indication at this point that the Houthis will seek to disrupt shipping in the Red Sea,” said Jakob Larsen, chief safety and security officer at shipowners’ association BIMCO.

Nonetheless, “the situation is very tense”, Larsen told AGBI. More shipowners are exercising extra caution and opting to stay away from the Red Sea and the Gulf, he added. 

The likelihood that Iran may try to shutter the Strait of Hormuz for a few weeks is “quite high” as Tehran scrambles for indirect responses to Israel’s offensive in the absence of military options, according to Prem Kumar, a partner at DGA-Albright Stonebridge Group, an advisory consultancy based in Washington DC.

Kumar said only about 3.5 million of the 16 million barrels of oil that flow through Hormuz every day can be rerouted via pipeline. Around 12 to 13 million barrels are at risk of being taken offline at least for a while, he said. 

“In a world where demand is around 100 million barrels a day, that’s a significant effect,” said Kumar, who served as senior Middle East and North Africa director on the National Security Council during the Obama administration. 

This fragile status quo will change if the US joins the conflict, according to BIMCO’s Larsen.

“If the US is suddenly perceived to be involved in attacks, the risk of escalation increases significantly,” he said. 

This could mean that Iran launches missile attacks on ships or lays sea mines in the region’s waters. Even if that does not happen, shipping costs are likely to rise, according to lawyers.

Shipowners pay a war risk premium on insurance to protect their vessels against conflict and terrorism, and they pay an extra fee – the additional war risk premium – to cross particularly high-risk areas.

Insurance prices have already risen since October 2023, when Houthi rebels began attacking Red Sea shipping. Further conflict or all-out war may drive additional war risk premiums above 0.5 percent of the value of the vessel,  according to Cameron Livingstone, a maritime lawyer.

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“This is an extraordinary cost for shipowners or charterers to pay,” Livingstone said.

Crew costs are also likely to increase, as sailors are often offered double pay for transiting conflict areas, he said.

“The profitability of cargos from this region is reducing and shipowners may seek charters elsewhere,” Livingstone said.