US launches new strikes on Iran — and adds to insurance market strains
The U.S. conducted self-defense strikes in southern Iran near Bandar Abbas, targeting missile launch sites and Iranian boats attempting to lay mines, despite a fragile ceasefire. The attacks heightened tensions in the Strait of Hormuz, exacerbating insurance market strains and raising premiums for maritime transit to 1.5-5% of vessel value.
U.S. forces launched strikes in southern Iran on Memorial Day, targeting missile launch sites and Iranian boats near Bandar Abbas, the country’s key naval base. The operation followed threats to U.S. troops and came as President Donald Trump honored 13 service members killed in Operation Epic Fury at Arlington National Cemetery. U.S. Central Command confirmed the strikes were conducted under self-defense provisions, though they occurred during a declared ceasefire. The strikes took place in the Strait of Hormuz, a critical shipping lane through which 20% of the world’s seaborne oil typically passes. Iranian forces had been accused of attempting to emplace mines, though no formal blockade had been declared. The U.S. emphasized restraint amid ongoing diplomatic efforts toward a potential peace framework. The attacks further strained the marine insurance market, already destabilized by the February escalation. After coordinated U.S. and Israeli strikes—including an assassination attempt on Iran’s Supreme Leader Ali Khamenei—war risk premiums surged fivefold within 48 hours. Major insurers canceled coverage, and Lloyd’s Market Association redesignated the Arabian Gulf as a conflict zone, causing tanker traffic to plummet by over 80%. Despite claims of coverage cancellations, Lloyd’s later clarified that 88% of underwriters still offered hull war risks, though at drastically higher costs. Premiums for Strait of Hormuz transits rose to 1.5-3% of vessel value, or up to 5% for U.S., UK, and Israeli-linked ships. For a Very Large Crude Carrier valued at $138 million, this translated to $10-14 million per voyage, up from pre-war figures in the hundreds of thousands. Insurance professionals question whether ‘restraint’ and ‘self-defense strikes’ align with a functioning ceasefire, given the ongoing risks. The Strait remains volatile, with Intact Insurance’s global marine head noting that ‘normality’ has yet to return despite the nominal ceasefire. The latest strikes underscore the fragile balance between diplomacy and military action in the region.
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