A ship is struck thousands of kilometres away, and within days fuel costs more in Oslo. The mechanism connecting those two facts is insurance — and it is worth understanding.

Every cargo is insured

No shipping company sends a vessel worth tens of millions — carrying cargo worth more — without insurance. Two policies matter here. One covers the ship and cargo in ordinary conditions. The other, the war-risk premium, covers damage from conflict: missiles, mines, drones, seizure.

How risk becomes a number

Insurers divide the world’s seas into zones. When attacks occur in a zone, underwriters reprice it — often within days, sometimes hours. A premium that was a fraction of a percent of a ship’s value can multiply several times over. Crucially, this applies to every ship entering the area, not only the ones that were hit.

That is the key insight: the cost of danger is paid by everyone sailing there, whether or not anything further happens.

The three ways it reaches your bill

• Higher premiums are added to the freight cost of each cargo, and passed along the chain.
• Longer routes. Some owners avoid the area entirely — extra days at sea mean more fuel, more crew wages, later delivery.
• Traders pricing in fear. Oil and gas markets move on expectations. If traders believe supply might be interrupted next month, the price rises today.

Why it falls again slowly

Premiums drop far more reluctantly than they rise. Insurers wait for a sustained quiet period before repricing downward, which is why energy costs often stay elevated for weeks after the news has moved on. It is not conspiracy, just caution with other people’s money.

Current context: Tankers hit in the Strait of Hormuz and why that waterway matters.