The ceasefire announced on 8 April between Washington and Tehran has been called, variously, a triumph, a fig leaf and a trap. It is in fact none of these. It is a quote on a screen at Lloyd’s of London, and it will hold for exactly as long as that quote keeps falling. Sir Keir Starmer’s hurried tour of the Gulf this week will be judged not by the communiqués in Riyadh or the photo-ops in Doha, but by a single number: the war-risk premium on a seven-day transit of the Strait of Hormuz. Until that number is back near where it began, the strait is closed regardless of what any politician says — and the Prime Minister’s job, properly understood, is to close the gap.

Consider the arithmetic. Before Operation Epic Fury in late February, hull war cover for a Hormuz transit ran at 0.125 to 0.25 per cent of a vessel’s value — roughly $40,000 for a $120m VLCC, amortising to a few cents per barrel. By the second week of March, with the Joint War Committee having issued JWLA-033 and the International Group of P&I Clubs voiding existing cover at midnight on 5 March, Lloyd’s underwriters were quoting 1 per cent as routine, 7.5 per cent for awkward flags and double-digit millions per voyage for the genuinely exposed. Daily VLCC charter rates quadrupled to nearly $800,000. Tanker traffic through the strait fell about 70 per cent and roughly 150 ships anchored outside it. The IRGC did not need to close Hormuz. The London insurance market closed it for them, within seventy-two hours of the first........

© The Times of Israel (Blogs)