War risk insurance has quietly become one of the largest line items in Gulf commodity freight. Many buyers still treat it as a footnote, and that mistake is expensive.
What war risk insurance actually covers
Standard marine cargo policies exclude losses caused by conflict. Therefore, a separate cover is written for voyages through designated high-risk areas.
The policy typically responds to seizure, mine damage, missile or drone strike, and detention. It is priced as a percentage of the insured value of hull or cargo.
Crucially, the premium is set per voyage, not per year. As a result, it moves fast when conditions change.
The scale of the cost today
Consider a sulphur shipment from the Gulf to China. Freight for a 30,000 to 35,000 tonne vessel was assessed at $140 to $145 per tonne at the end of July.
However, market reporting indicates that freight plus additional premiums for vessels willing to enter the Strait of Hormuz can reach $200 per tonne combined.
On a 30,000 tonne parcel, that difference is roughly $1.7 million. It is not a footnote.
Why war risk insurance breaks price comparisons
Here is where buyers get caught. Two sellers quote CFR to the same port, and one looks $60 per tonne cheaper.
Then the cheaper seller bills war risk separately on shipment. Suddenly the gap reverses.
Because there is no single market convention, both quotes can be honest. The difference sits in what each one includes.
Four questions to ask before comparing offers
- Does your CFR figure include war risk cover, or is it billed at shipment?
- What premium rate has been assumed, and on what insured value?
- Who bears the increase if the rate rises between contract and loading?
- Which underwriter carries the risk, and is the policy assignable?
Get these answers in writing. Above all, get them before you sign, not after.
The escalation clause problem
Many contracts now include a clause passing any premium increase to the buyer. That is common, and it is not unreasonable.
Nevertheless, an open-ended clause leaves you exposed. Premiums have moved sharply within a single week during 2026.
Consequently, buyers should negotiate a cap. A clause that shares increases above an agreed threshold is far safer than one that transfers everything.
How this affects your payment instrument
A letter of credit is drawn for a fixed amount. If war risk is billed separately and the premium rises, the invoice may exceed the credit value.
The bank will then refuse the documents. Meanwhile, the cargo sits, and demurrage accrues.
Therefore, build a tolerance into the credit. A stated percentage above the contract value gives room for legitimate variation without a fresh amendment.
Our guide to CIF and FOB terms explains which party carries insurance under each structure.
Routes that avoid the premium
The simplest way to reduce war risk insurance cost is to avoid the designated area entirely.
For fertiliser buyers, that means qualifying producers outside the Gulf. Egypt ships from Mediterranean and Red Sea terminals. Russian and Indonesian cargoes use entirely different lanes.
These origins are not automatically cheaper at FOB. However, once premiums are added, the delivered comparison often shifts.
We cover the practical options in our guide to sourcing urea and sulphur outside the Gulf.
A verification point worth noting
Fraudulent sellers have started using insurance as a pretext for advance payments. A request to fund a premium before cargo is verified should end the conversation.
Legitimate cover is arranged by the party carrying the risk and settled through normal channels. It is never a buyer-side fee paid to a supplier in advance.
Our guide to advance payment scams covers how these requests are structured.
Sourcing with delivered pricing
We quote on a delivered basis and state insurance separately, so nothing arrives as a surprise at shipment.
- Freight and war risk shown as separate line items
- Non-Gulf origins offered where routing reduces premium exposure
- Independent pre-shipment inspection on every cargo
- Confirmed irrevocable letter of credit terms only
- No upfront costs to buyers at any stage
Send your product, volume and destination port. We return a delivered quote within 24 hours. Contact our team or email sales@ruwadaltasaheel.com.
Frequently asked questions
Is war risk insurance included in a standard CIF quote?
Not automatically. Standard cargo cover excludes conflict losses, so war risk is written separately. Always confirm in writing whether it sits inside the quoted figure.
Who pays if the premium rises after signing?
That depends entirely on your escalation clause. Without one, the party who contracted the cover carries it. Negotiate a cap rather than accepting open-ended exposure.
Can I avoid the premium by changing origin?
Often yes. Cargoes routed outside designated high-risk areas do not attract the charge, which can offset a higher FOB price.