Report: The Price of Passage, Middle East Crude Nears 80 Percent
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Middle East crude exports have recovered to just under 80 percent of their pre-war level, according to a 28 September note from ship tracking firm Kpler carried by CNBC, yet the cost of moving each cargo through the Strait of Hormuz now turns on insurance and law as much as on freight. The Price of Passage, The Edge special report for October 2026, sets out the three layers that decide that cost and what a single charge on cargo value would mean in dollars.
Cover is still written
War risk cover in the Gulf is priced privately, between underwriter and broker. The Joint War Committee, which lists the waters where voyages must be notified to underwriters and plays no part in setting rates, has stated that hull war cover remains in place and available in the London market, reviewed case by case. Its current circular, JWLA-035 of 16 September 2026, amended only the Black Sea entry; the Gulf, the Gulf of Oman, the southern Red Sea and every state on the Gulf’s shores stay listed as before. The International Maritime Organization counted 88 confirmed incidents and 24 seafarer fatalities in the Strait of Hormuz and the wider Middle East as at 30 September.
The clause and the toll
The legal layer is where the cost stops being a premium. The US Treasury’s Office of Foreign Assets Control warned on 24 August that US and non-US persons risk sanctions by dealing with the three designated bodies named in its alert on passage through the strait, including by accepting insurance or other services from them, even when nothing is paid. On 23 July the Lloyd’s Market Association published LMA5708, a model hull clause under which insurers do not indemnify a payment made for a vessel to pass and, where one is made, are discharged from their obligations for that vessel, with a carve-back for charges levied only for specific maritime or navigational services permitted under the Law of the Sea convention and sanctions wording.
On the toll itself, the statements point different ways. A US official said on 6 August that temporary routes would carry no tolls or charges; Iran’s Fars agency reported that Iran plans penalties of up to 20 percent of cargo value for those who violate the terms of an agreement still under review; and on 4 October the speaker of Iran’s parliament said the strait would not open until Iran’s conditions were met.
Flows are coming back
The International Energy Agency put flows through the strait at 7.6 million barrels a day in August, 13.1 million below the pre-war level, which places that level at 20.7 million and August at 36.7 percent of it, on our calculation. Saudi Arabia and the UAE lifted exports from Yanbu on the Red Sea and Fujairah on the Gulf of Oman from 4.1 million barrels a day in February to 7.8 million in June, and the agency counts more than 500 million barrels of lost Hormuz supply made up by the bypass routes since the conflict began. Clearance through the strait then reached 10.591 million barrels a day on 26 September against the tracking firm’s pre-war baseline of 17.133 million, or 61.8 percent of that baseline on our calculation.
| Measure | Level | Date |
|---|---|---|
| Hormuz flows | 7.6 million b/d | August 2026 |
| Hormuz flows, pre-war | 20.7 million b/d | Pre-war |
| Yanbu and Fujairah exports | 4.1, 7.8 and 5.5 million b/d | February, June, August |
| Hormuz total clearance | 10.591 million b/d | 26 September |
| Clearance baseline, pre-war | 17.133 million b/d | Pre-war |
| Emergency stocks released | About 325 of 400 million barrels | By 2 October |
b/d is barrels a day. Flows, the bypass exports and the stock release are from the International Energy Agency; clearance and its baseline are Kpler data. The pre-war flow level is the August flow plus the stated shortfall, on our calculation. The two pre-war levels are different series and are not directly comparable.
What one charge costs
At Brent’s close of 102.25 dollars a barrel on 2 October, a 2 million barrel cargo is worth 204.5 million dollars on our calculation, so each percentage point charged on cargo value costs 2.045 million dollars and a charge at the 20 percent level reported in August would cost 40.9 million dollars. The larger cost sits outside that arithmetic. Where the July clause is written into a hull policy, a qualifying payment to pass discharges the insurer for the vessel, which is why, on our reading, the toll question rather than the oil price will decide when premiums come down.
Why it matters: For Gulf exporters the physical trade has adapted faster than the legal one. Saudi Arabia and the UAE turned Yanbu and Fujairah into a bypass that has offset more than 500 million barrels of lost Hormuz supply, and for Kuwait, Qatar and Bahrain, whose seaborne exports leave through the strait, the measure that counts is clearance, which reached 61.8 percent of its pre-war baseline on 26 September, on our calculation. With cover still on offer at a price, the cost of each cargo now turns on whether passage stays free of charges.
Outlook: The first fall in Gulf war risk rates is most likely to follow a further rise in clearance toward the pre-war baseline and passage free of charges, the position taken by the International Maritime Organization’s council, eight shipping associations and the US official quoted in August. The Edge base case is that the Gulf listings are carried forward at the committee’s next review and that cover stays available at negotiated prices while incidents continue, as with the attacks UK Maritime Trade Operations recorded on 1, 2 and 3 October. Every barrel of recovered Hormuz clearance, and every cargo that leaves through Yanbu and Fujairah, adds to the case for lower rates.
Sources: The Edge.
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