Strategic significance and the current disruption

As of 28 February–3 March 2026, reporting indicates a sharp escalation in Gulf hostilities and a de facto interruption of safe commercial transits through the Strait of Hormuz, driven by attacks on more than five tankers by drones and missiles, and clear threats issued by the IRGC against transiting vessels. Reuters reports that an IRGC official stated on 02 March 2026 that the Strait was “closed” and threatened that any ship attempting to pass would be set “ablaze.” Reuters also reports the Strait has been closed for multiple consecutive days, with ships stranded in/around the area and coastal states and shipping administrations issuing avoidance guidance. War Cover has increased heavily with rates changing on a daily basis.

As a consequence, over 3,000 ships are currently trapped on either side of the Strait.

From an energy-trade standpoint, the Strait remains the world’s most critical hydrocarbon chokepoint. The U.S. EIA estimates that in 2024 flows through the Strait averaged ~20 million b/d, roughly ~20% of global petroleum liquids consumption. Separately, current reporting also highlights LNG exposure (particularly Qatari LNG) and the systemic knock-on effects on freight, routing, and supply chains when transits stop or become effectively uninsurable.

 

Legal framework and navigational rights (UNCLOS and Iran’s position)

The Strait of Hormuz is widely analysed as an international strait used for international navigation, where “transit passage” (UNCLOS Part III) would ordinarily apply as between areas of EEZ/high seas. However, Iran has signed but not ratified UNCLOS and has historically taken the position that the full transit passage regime does not bind it vis-à-vis non-parties (and/or that a narrower regime applies). This matters operationally because, even where shipowners consider they have a navigation right in principle, real-world interdiction risk, coastal-state enforcement actions, and sanctions/compliance constraints can create a practical “closure” long before any formal blockade is declared.

 

Charterparty consequences and war-risk triggers

In a live closure/threat environment like the present one, charterparty disputes typically concentrate around:

• War risks / hostile acts clauses (e.g., “war”, “warlike operations”, “acts of hostility”, “blockade”, “mines”, “missiles/drones”, “terrorism”, “dangerous waters”), and whether the master/owners can refuse orders, require alternative nominations, deviate, or suspend performance. Industry guidance has recently reiterated that Hormuz presents a legally “contested” navigation regime plus acute operational risk in the current escalation.

• Safe port / safe berth warranties: a port can be “unsafe” if the vessel cannot reach, use, and depart it without being exposed to danger that cannot be avoided by good navigation and seamanship. In a situation where the approach route is exposed to credible attack threats, the risk analysis shifts quickly from “commercial inconvenience” to objective safety.

• Laytime/demurrage and off-hire: delays caused by routing changes, waiting for convoy/clearance, or insurers’ approvals can trigger contentious questions about whether time counts, whether delay is an owner’s risk, and whether off-hire exceptions bite (depending on form and facts).

• Frustration / impossibility and force majeure: a genuine closure with no safe/insurable alternative may push parties to argue force majeure (if present) or, in extreme cases, frustration. But outcomes are clause- and fact-sensitive: courts/tribunals generally scrutinise whether performance is truly prevented versus merely more expensive.

• Liens: Where discharge at an alternative port becomes necessary, particularly with perishable cargo on board, owners may seek to exercise a contractual lien over the cargo to secure payment of any additional costs and sums due arising from the diversion.

The key practical point for “today’s” Hormuz context is that insurance availability and cost can become the gating item: if underwriters will not quote (or quote only on prohibitive terms), owners may argue they cannot be required to expose ship/crew to uninsured war perils.

 

Insurance market response (what is changing right now)

The insurance response has moved beyond incremental pricing. The reports state that the Joint War Committee (London market) has expanded the Gulf high-risk listing as the conflict escalated, and that war-risk premiums have increased sharply (reported as multiples in the current spike).

Following tanker attacks and the IRGC’s declaration that the Strait of Hormuz was “closed”, major P&I Clubs  (including Gard, Skuld, NorthStandard, the London P&I Club and the American Club) issued cancellation notices (NoC’s) for war-risk cover for non-mutual (fixed premium) entries stated to take effect from 5 March 2026, forcing owners to seek replacement terms in a rapidly tightening market. In parallel, brokers report that underwriters are not only repricing but in some cases declining to quote for Hormuz transits, with war-risk premiums reportedly jumping to as high as 1% of hull value within 48 hours (from around 0.2% the prior week), illustratively pushing the per-voyage war premium for a USD 100m tanker from roughly USD 200,000 to about USD 1m. This dynamic creates a de facto closure risk even without a formal blockade: if ships cannot secure affordable war cover (or any cover at all), charterers, ports, banks and regulators effectively treat the voyage as non-performable, driving immediate knock-on increases in freight and delivered energy costs.

 

Legal remedies and risk mitigation (what stakeholders should do now)

Given this week’s fact pattern, stakeholders should treat Hormuz as a live contractual risk allocation exercise, not merely a security briefing:

• Charterparty hygiene (immediate): confirm the exact war risks wording (including “blockade/closure” language), notice requirements, and who decides route safety (owners/master vs charterers). Confirm whether additional premiums are for the charterers’ account and what evidence is required.

• Sanctions and trade compliance: screen cargo, counterparties, and voyage orders; ensure deviation decisions do not create separate sanctions breaches.

• Operational protocols: align with underwriter requirements (BMP-style measures where relevant, routing, AIS policy, security teams if lawful, crew briefing, documentation). Underwriters increasingly price based on demonstrated risk controls.

• Claims and disputes readiness: preserve evidence early (war-risk quotes/declinations, NAV warnings, port agent correspondence, AIS tracks, voyage instructions, logs). In the current environment, disputes often crystallise around whether refusal/deviation was reasonable and contractually permitted.

• Drafting upgrades (next fixtures/renewals): expressly include “strait closure / denial of access / loss of insurability / insurer refusal” in force majeure and war risks frameworks; hardwire cost allocation for additional premiums and re-routing.