Iran war and Hormuz crisis drive up coking coal shipping costs as war-risk insurance surges

The US-Israeli military strikes on Iran that began on February 28, 2026, and the ensuing Iranian retaliation have triggered a crisis in the Strait of Hormuz that is reshaping global shipping costs — and by extension, the economics of seaborne coking coal supply. In the weeks prior to the conflict, an average of 178 ships per day transited the Strait; by March traffic had reportedly fallen by roughly 95%. (FACT: World Economic Forum, April 2026) The Stimson Center describes the situation as a "soft closure" — while Iran has not formally declared a blockade, the combination of drone and missile threats, mines, electronic interference, and insurance withdrawal has made Hormuz commercially unusable for most operators. (FACT: Stimson Center, 2026)

Maritime insurers began cancelling war-risk coverage for vessels in the Middle East Gulf within days of the strikes. On March 2, Reuters reported that insurance companies were cancelling policies, leaving tankers damaged or stranded and at least two people dead. (FACT: Reuters, March 2, 2026) By March 6, war-risk premiums had surged by more than 1000% in some cases, with Marsh estimating ratings trending between 1% and 1.5% of vessel value — up from approximately 0.1% pre-conflict. (FACT: Reuters, March 6, 2026) Shipping lines including CMA CGM and Hapag-Lloyd imposed emergency surcharges of $1,500-$4,000 per container for Middle East-linked routes. (FACT: TRENDS Research & Advisory, 2026)

Coking coal is not a direct Hormuz transit commodity — the primary coal shipping routes from Australia to India, China, Japan, and Korea bypass the Persian Gulf. However, Kpler's March 2026 analysis makes clear that the Iran war is "reshaping dry bulk shipping" across the board. (FACT: Kpler, March 6, 2026) The mechanism is threefold: First, bunker fuel costs have risen sharply as the conflict reprices all marine fuels. Second, the diversion of global shipping capacity — tankers and container vessels diverted away from the Gulf — tightens availability across all dry-bulk segments, pushing up Capesize and Panamax freight rates. Third, the global insurance market for maritime risk has been repriced across all shipping lanes, not just those in or near the Gulf. Higher war-risk premiums for hull and cargo insurance are now embedded in all ocean freight contracts, adding a persistent cost layer to every tonne of coking coal moving by sea.

These rising costs compound an already tight coking coal market. The Australia-to-India freight spread for coking coal has come under upward pressure as dry-bulk vessel availability tightens. Kpler specifically notes that the war is lifting European coal demand via gas-to-coal switching, increasing competition for Capesize tonnage. (FACT: Kpler, March 2026) Trading Economics reports that coal futures are trading 22% higher year-to-date as of mid-May, partly reflecting higher shipping and logistics costs flowing into CFR pricing. (FACT: Trading Economics, May 20, 2026)

Governments have scrambled to respond. On March 3, President Trump ordered the US International Development Finance Corporation to provide political risk insurance for all maritime trade at "a very reasonable price." (FACT: Congress.gov/CRS, March 2026) The UK and France have hosted two conferences on reopening Hormuz and, alongside 36 other countries, signed a statement expressing readiness to contribute to safe passage. On April 17, France and the UK said they would establish an international defensive mission for the Strait once a sustainable ceasefire is agreed. (FACT: House of Commons Library, April 2026) However, as of late May, no ceasefire has materialized, and Iranian authorities have reportedly been applying tolls for ships passing through — a practice that did not exist before the conflict. (FACT: House of Commons Library, 2026)

The implications for coking coal buyers and sellers are structural. Shipping cost inflation from the Hormuz crisis is not a transitory shock — the insurance repricing will persist even after Hormuz reopens. The US Navy escort and government insurance backstop have not restored commercial confidence; shipowners remain deeply cautious about drone, mine, and missile risks, as well as the uncertainty around Iranian tolling demands. (FACT: House of Commons Library, 2026) Every tonne of Australian coking coal delivered to Indian or East Asian ports now carries a higher freight and insurance cost than the pre-February baseline, adding upward pressure to CFR-delivered coking coal prices independent of the FOB commodity price itself.