The global shipping industry is likely to experience a significant increase in freight, insurance, and crew wages in the near term due to Israel's retaliatory missile attack on Iran. However, ongoing loadings are expected to continue as usual, according to market participants on April 19.
"From the information we have as of now, the current loadings are going on in key oil [and refined products] producing countries but the situation is very fluid," said a shipping broker based in Singapore. The chartering of ships will depend on the scale of the conflict.
South Korean refining companies have expressed more concern over higher freight costs for importing cargoes from the Middle East than security issues. "The Persian Gulf loadings will not be affected so quickly and will probably depend on the scale of Iran's retaliation," an executive at a major oil tanker-owning company stated. However, he added that his company would seek higher freight for voyages from the region.
Japan's Mitsui OSK Lines (MOL) has yet to respond to queries about potential impacts on its shipping operations in the Persian Gulf following Iran's seizure of a Portuguese-flagged container ship with Israeli-linked ownership earlier this month.
Market participants pointed out that unless hostilities in the Persian Gulf reach levels similar to those seen in Ukraine-Russia conflict, trade flows will continue but become more expensive. Crew members may demand higher wages or be reluctant to serve in voyages within a conflict zone.
Industry sources predict that Additional War Risk Premia (AWRP) will increase significantly in the coming days. Any blockage on the Straits of Hormuz could lead importers to dip into their strategic reserves and engage in panic buying from West Africa and the US.
Idemitsu Kosan, Japan's second-largest refiner, is considering procuring crude oil from West Africa and North America as alternative supply sources amid potential Middle East supply disruptions.
During the Iran-Iraq war in the 1980s, only 20% of the global tanker fleet lifted cargoes from the region, often under blackout conditions. Meanwhile, seafarers' wages doubled, according to a navigator who sailed such tankers at the time.