Iran launched a fresh wave of drone and missile strikes against Kuwait and Bahrain in the early hours of Wednesday, hitting the T1 terminal building at Kuwait International Airport, wounding several people and causing what Kuwait's General Civil Aviation Authority described as "significant material damage." All commercial flights have been suspended and diverted until further notice, the official Kuwait News Agency reported.
Bahrain's Interior Ministry activated warning sirens as the United States military's Central Command (CENTCOM) said it intercepted three ballistic missiles heading for the kingdom. CENTCOM added that it had carried out "self-defense" strikes on Iran's strategically critical Qeshm Island in the Strait of Hormuz after defeating "multiple" Iranian missiles and drones targeting civilian vessels and allied forces. A further wave of drones that attempted to strike US forces in Kuwait "failed to impact," CENTCOM said.
Iran's Islamic Revolutionary Guard Corps (IRGC) claimed it had attacked the headquarters of the US Fifth Fleet in Bahrain - a claim the US military flatly denied - as well as targeting an airbase and helicopter assets in an unspecified regional country. Semi-official Iranian news agency Tasnim released footage purporting to show the launches, describing them as retaliation for "US Army aggression."
The latest escalation arrives at the worst possible moment for London's marine and aviation underwriters. Wednesday's strikes on Kuwait's airport represent a direct kinetic event against civilian aviation infrastructure in a country that the Lloyd's Market Association's Joint War Committee added to its high-risk designated area in early March - a move that was already expected to add more than £100,000 to the cost of insuring a single tanker traversing the region, according to reporting in The Daily Telegraph at the time.
War-risk premiums surged from approximately 0.25% of hull value before the conflict began on 28 February to between 3.5% and 7.5%, according to David Smith, head of marine at broker McGill and Partners, as covered in our earlier analysis of how the US–Iran war is straining Lloyd's and deepening the Gulf shipping insurance crisis. Those figures represented the peak of the early-conflict repricing. More recent data from S&P Global Commodity Insights shows additional war-risk premiums eased to around 1% by late March as ceasefire hopes briefly improved, and according to Argus Media, levels for tankers and bulk carriers stood at approximately 1% on 13 April, with a 35–50% no-claim bonus applied to vessels remaining in the Mideast Gulf.
With diplomatic progress now stalling and kinetic attacks extending to airport infrastructure, brokers are likely to revise those levels upward once more.
For aviation underwriters, the airport strike intensifies a repricing cycle already well under way. In its Airline Insurance Market Renewal Outlook for Q2 2026, broker WTW flagged three pressure points: immediate operational disruption, a squeeze on insurance capacity, and longer-term consequences for the aviation sector. Our coverage of how the Iran conflict is reshaping airline insurance pricing and war-risk negotiations into 2026 sets out the detail. Law firm Kennedys has reported rate increases of 10% or more for lower-risk carriers, with far steeper hikes for airlines operating Middle East routes.
Despite the deteriorating picture, Lloyd's has consistently maintained that cover remains available. The Lloyd's Market Association stated in a market bulletin on 23 March 2026 that war insurance remains available within the Lloyd's and London company market for vessels wishing to transit the Strait of Hormuz, and that "notice of cancellation is built into shipowners' contracts to allow renegotiation to take account of increased risk" - not a withdrawal of capacity. Our reporting on why the insurance industry's biggest problem in the Gulf is a widespread misconception about market availability examines this in depth. Calvin Gray, global head of marine at Intact Insurance, told Insurance Business UK: "The Strait may be officially open, but we are far from seeing normality restored. Cover will return where voyages are considered safe, but that threshold has not yet fully been met."
Washington's headline insurance response to the crisis also remains untested in practice. The US International Development Finance Corporation's maritime reinsurance facility was expanded to US$40 billion in April, with Travelers, Liberty Mutual, Berkshire Hathaway, AIG, Starr and CNA joining lead underwriter Chubb, on top of DFC's existing US$20 billion in rolling coverage. It has written no business to date. A DFC spokesperson confirmed the facility "stands ready," saying: "If needed, DFC's Maritime Reinsurance facility will provide US$40 billion of coverage to deliver on President Trump's directive to help restore maritime trade through the Strait of Hormuz."
Our investigation into why Washington's US$40 billion Hormuz insurance fix has attracted zero takers from the shipping industry found that the programme was built on a fundamental misreading of why shipping stopped: the problem was not insurance availability, but the war itself.
Brent crude rose to US$96.89 a barrel on 3 June 2026, up 0.93% from the previous day, on its third consecutive session of gains as uncertainty surrounding US–Iran peace talks kept a geopolitical risk premium embedded in oil prices, according to Trading Economics data. Futures pushed towards US$98 a barrel during Wednesday's session as concerns grew that the lack of a diplomatic breakthrough could require further drawdowns in global crude inventories. US industry data showed crude stockpiles fell by 6.8 million barrels last week, which if confirmed by official government figures later on Wednesday would mark the sixth consecutive weekly decline.
Shipping data published by Reuters revealed that rare tanker movements through the Strait of Hormuz have nonetheless continued, with two oil tankers - the Cy Victorious and the Sti Elysees - successfully exiting the waterway in late May, and a liquefied natural gas carrier loading cargo in the UAE. Four ballast LNG tankers are reportedly holding positions near the strait's eastern entrance, signalling what Reuters described as "fluctuating hopes for a reopening."
The Strait of Hormuz, through which roughly a fifth of the world's oil and liquefied natural gas moved before the war began on 28 February, has been commercially closed for longer than it has been militarily dangerous - a point our correspondents reported in depth in tracking the multiple vessels hit or destroyed and the UAE port strikes as US and Iran traded fire in Hormuz. The commercial closure reflects the chilling effect of risk pricing and crew reluctance, rather than outright physical interdiction alone.
Wednesday's strikes came as diplomatic efforts faltered. Iran's semi-official Fars news agency reported that an exchange of messages between Tehran and Washington aimed at reaching a memorandum of understanding to end the war had stopped several days ago, though President Trump pushed back on social media, saying talks were ongoing "every day." The two sides have yet to sign off on any deal, Reuters reported. Trump also said a memorandum of understanding to reopen the Strait of Hormuz could be reached as early as next week, though several issues remain unresolved.
In a further signal of the conflict's economic reach, Japan's cabinet approved a US$19 billion supplementary budget on Wednesday to assist households struggling with soaring energy and living costs driven by the Gulf conflict, according to AFP. Prime Minister Sanae Takaichi said the measure was formulated "from the standpoint of minimizing risk" amid ongoing Middle East uncertainty - underlining the breadth of secondary economic exposures insurers and risk managers face as the conflict enters its 96th day.
The immediate questions center on whether Wednesday's airport strikes trigger fresh aviation war-risk cancellations or price adjustments for Kuwait and Bahrain; whether London market property and casualty lines face infrastructure claims from the T1 terminal damage; and how renewed hostilities affect the already slim diplomatic window for a Strait of Hormuz reopening.
A Morningstar DBRS report published last week found, as we reported, that global specialty P&C insurers have largely absorbed Middle East war losses with direct financial impacts remaining manageable in Q1 2026. That assessment will be tested further if June brings sustained strikes against civilian infrastructure across the Gulf states.
As we noted at the outset of hostilities, the escalation arrived at a moment when global insurance markets had been pricing for competitive conditions - abundant capacity, easing reinsurance, softening rates. Our analysis of whether the US–Iran conflict can harden the global insurance market after years of soft cycle conditions remains essential reading for anyone monitoring how this conflict reshapes underwriting appetite into the second half of 2026.
Underwriters, brokers and risk managers should also revisit our earlier coverage of how Gulf war-risk repricing is disrupting global insurance markets across marine, aviation, property and trade lines, which maps the full exposure picture across lines of business.
