It’s a million dollar question of course and for any cargo, from oil to pharma products, food to cars, to make the journey the ships and cargo require valid insurance. Here are some thoughts from the LMA;
“The LMA welcomes the Memorandum of Understanding (MoU) between Iran and the United States that has been reported today. While we wait for the details, there are certain practical steps that we believe are necessary before the vessels that have been stranded in the Gulf for the last 110 days can resume transiting the Strait of Hormuz.
Further clarifications will also be necessary with respect to longer-running issues impacting shipping, such as the extent to which the US, UK and EU will be lifting sanctions and designations with respect to Iran.
The first step is the importance of cooperation between Iran, US and other states such as Oman on navigational safety and the prioritisation of vessel passage.
The second is verified mine clearance and ongoing surveillance. The threat of mines remains a significant barrier to the resumption of trade in the region. Ongoing monitoring of the seaways is required to provide reassurance and confidence to shipowners and their crew, particularly when it comes to vessels who are considering re-entering the Gulf in the future.
The third is clarity of provision of emergency services support in the event of a vessel or crew requiring rescue whilst in Iranian territorial waters. In order to return to the ‘shipping as usual’ state, ordinary salvage and maritime services, including for incoming vessels, should be readily available.
Fourth, vessels will need to be fully restored to a seaworthy state prior to transiting the Strait, including GPS services, and there are reports of issues, such as stores, fuel and bottom scraping, from vessels as a result of being at anchor for such an extended period.
Fifth, there needs to be a full reopening of the port infrastructure system, including pilotage, berthing and bunkering, to enable the safe loading and discharge of cargos.
And finally, clarity around sanctions, terrorism legislation and toll payments. There must be clear advice and consistency of approach from the UK, EU and US on the extent to which sanctions and designations of Iranian entities have been amended. The MoU refers to shipments of Iranian oil and that there will be no toll payments. However, a greater level of detail will be required before insurers and insureds can be clear as to what trade can safely take place.
The main requirement for recovery is stability and certainty for shipowners and insurers. The road to recovery in the Gulf will be a long and complicated one. It will take months for some sort of normality to return to international shipping with vessels in the wrong place and supply chains distorted, much in the same way that after a public transport strike it always takes time for complicated, detailed timetables to return to normal.
The London insurance market remains open, as it has been over the last 110 days, and is committed to helping clients navigate this complex environment. The LMA will continue to support and represent the views of the market through this period.
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