Global oil markets are facing a historic disruption centered on the Strait of Hormuz, where tanker traffic has collapsed and supply chains remain constrained. The scale of the disruption reflects not just geopolitical tension but a structural breakdown in the mechanisms that enable physical trade. Oil prices alone are no longer sufficient to restore flows, as the ability to move cargo depends on entirely different market dynamics. This shift places insurance markets at the center of global energy logistics and recovery timelines.
Kathryn Rooney Vera, StoneX Group Chief Market Strategist, has extensive experience analysing global macroeconomic shifts and cross-asset market dynamics during periods of geopolitical stress. Her perspective uniquely connects insurance market behaviour with physical commodity flows, offering insight into the real constraints shaping today’s oil market disruption.
Key Themes from the Discussion
War risk premiums surged from 0.2% to 1%, making oil shipping economically unviable without security guarantees.
Approximately 90% of tanker traffic through the Strait of Hormuz has halted, disrupting around 20 million barrels per day.
Oil flow recovery depends on insurance coverage and naval escort commitments, not oil price movements.
Insurance markets are now the primary constraint on oil flow recovery as of March 2026 due to surging war risk premiums. Kathryn Rooney Vera states that "oil prices are what everyone is watching. They're not what determines whether flows resume. Insurance does", highlighting a fundamental shift in market drivers. Consequently, even elevated oil prices cannot incentivise shipping if cargo cannot be insured under current risk conditions. This dynamic forces market participants to monitor insurance coverage decisions as the true signal of recovery, rather than relying on traditional price indicators.
War Risk Premiums Reshape Oil Shipping Economics
War risk premiums have increased sharply, fundamentally altering the economics of transporting oil through key routes. As Kathryn Rooney Vera explains, "war risk premiums went from 0.2% of vessel value per transit to about 1%", significantly increasing costs on high-value cargo. This escalation results in millions of dollars in additional expense per shipment, making many trades uneconomical unless oil prices remain significantly elevated. As a result, commercial shippers are withdrawing from the market, leading to a collapse in tanker traffic and prolonging supply disruptions across global energy markets.
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--- Written by Frédéric Guétin, StoneX TV Producer
--- Expert: Kathryn Rooney Vera, StoneX Group Chief Market Strategist
Energy
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