The fragile truce holding together the world's most important oil chokepoint appeared to be in tatters on Wednesday, after the United States launched its heaviest wave of strikes on Iran since February, Tehran's Revolutionary Guard hit back at American bases in Bahrain and Kuwait, and President Trump himself declared the ceasefire dead.
US Central Command said it had struck more than 80 targets – including dozens of Islamic Revolutionary Guard Corps (IRGC) boats, air defence systems and missile launch sites – in retaliation for attacks this week on three commercial tankers transiting the Strait of Hormuz. Iran responded within hours, striking what it said were 85 US military facilities and shooting down an American drone.
Speaking at the NATO summit in Ankara on Wednesday, Trump told reporters: "As far as I'm concerned, it's over," adding of Tehran's leadership: "they're liars, they're cheats, they're sick people." He stopped short of saying the US would resume the war outright, and indicated negotiators could keep talking if they wished: "I'll let our wonderful negotiators keep talking if they want, but I don't see it." For a market that has spent months distinguishing political rhetoric from operational reality, that ambiguity matters: a ceasefire declared "over" in a press conference is not the same as a change in the facts on the water, but it does remove any remaining pretence that the 17 June memorandum of understanding is holding.
For insurance professionals who have spent four months watching marine war rates gyrate with every twist in the conflict, Wednesday's escalation is the moment the market feared: a ceasefire, already strained by a round of strikes on 27 June, now appears to be unravelling entirely at the political level as well as the military one – just as underwriters had begun cautiously easing pricing.
Brent crude jumped more than 5% to around $78 a barrel within hours of Trump's remarks, and government bonds sold off as investors priced in the inflationary hit from sustained higher energy costs. The 10-year UK gilt yield rose 0.09 percentage points to 4.95%, while the 10-year US Treasury yield climbed 0.05 percentage points to 4.57%. Traders also brought forward their expectations for central bank rate rises: a Bank of England quarter-point increase is now fully priced in by year-end, having not been expected until mid-2027 at the start of the week, with the Federal Reserve and European Central Bank both now expected to raise rates by October and September respectively.
"It's a reminder that nothing has changed in terms of the bond market's vulnerability to oil prices," said Neil Mehta, a portfolio manager at RBC BlueBay Asset Management. For marine underwriters, the read-through is twofold: higher oil prices support the value of the cargo and vessels they are insuring, while a renewed inflationary shock complicates the rate environment across every other line of business at the same time as war-risk pricing is being repriced upward.
Hull war premiums for vessels transiting the Strait had fallen by more than half in the weeks after the ceasefire, from around 5% of vessel value to roughly 2% after discounts, as nervous capacity returned to the market. Before the war began in February, rates stood at roughly 0.25% of hull value; at their peak they touched 10% – a near 4,000% increase, according to Dylan Saunders-Mortimer, UK war leader at Marsh.
That recovery was always described as conditional rather than settled. Calvin Gray, global head of marine at Intact Insurance, warned that war risk pricing would remain on edge even after the Strait reopened, saying "the Strait may be officially open, but we are far from seeing normality restored," and that capacity "will be deployed selectively, based on real-time assessments of risk rather than political announcements."
James Reason, a broker at WTW, struck a similarly cautious note, telling this publication that while "the longer this continues without incident, rates will continue to improve," underwriters remained wary because "there are still reports of mines in parts of the Strait of Hormuz transit corridors." Raj Abrol, chief executive of Galytix, was blunter still: "Insurance premiums that spiked won't come down until underwriters believe the risk has genuinely changed."
That belief now looks further away than ever. The latest strikes followed the US Treasury's decision to revoke a licence permitting Iranian oil sales – part of the memorandum of understanding signed alongside the ceasefire – with a US official saying Washington intended to "impose heavy costs" on Tehran. Iran's deputy foreign minister, Kazem Gharibabadi, called the strikes a "serious violation" of the agreement and warned of "decisive actions to safeguard its national interests."
NATO secretary-general Mark Rutte offered a strong endorsement of the US response, telling reporters alongside Trump in Ankara: "I think what you did last night was absolutely necessary. It was a very strong response." That reflects a NATO alliance now openly split on the Iran campaign – several European members reportedly declined to support the US operation, with Trump singling out Spain for closing its airspace to American aircraft and threatening to "cut off all trade" with Madrid as a result – a reminder that the political fallout from this conflict is spilling well beyond the Gulf and into transatlantic trade relations that insurers with political risk and trade credit exposure will want to watch.
Even before Wednesday's exchange, analysts had warned that a swift reversal in rates was structurally unlikely. Current industry estimates put war-risk pricing at between 3% and 8% of vessel value – translating into bills of $3 million to $8 million for a single large tanker transit. Brokers have repeatedly noted that premiums are, as one Singapore-based underwriter told Lloyd's List, "quick to go up, slow to come down."
Rahul Kapoor, vice-president and global head of shipping at S&P Global Energy, has cautioned against reading insurance pricing alone as the barrier to normal traffic. "The Strait of Hormuz is not seeing those transits because of insurance challenges," he said. "It's not seeing those transits because of the safety of the crew, safety of the cargo, and the vessel." That distinction matters more than ever now: with the US president himself declaring the ceasefire over, shipowners' masters have even less basis to certify a voyage as safe, regardless of where premiums settle.
The Joint War Committee of the Lloyd's Market Association has already expanded its high-risk designation to cover the entire Persian Gulf, and reinsurers have been left absorbing losses across marine hull, cargo, energy infrastructure and political violence lines simultaneously – what Howden Re has described as a "rare multi-line insurance event testing the global reinsurance market simultaneously."
Iran's unresolved plan to charge tolls through its Persian Gulf Strait Authority – an entity already designated by the US Office of Foreign Assets Control – adds a further complication that London underwriters have called commercially and legally unworkable, regardless of how the current military exchange resolves.
For now, the message from the market is one of familiar caution. As Marcus Baker, global head of marine, cargo and logistics at Marsh, put it before this week's escalation: "there is a degree of nervousness around the situation." Trump's declaration that the ceasefire is over will have done nothing to ease it – and with the US president simultaneously threatening to widen a trade dispute with a NATO ally, the range of risks London's market is now pricing has grown well beyond the Strait itself.
