Hormuz Risk Premium Underpriced: GNSS Spoofing and Iran's Compulsory Insurance Reshape Shipping Costs
Alina Collins
The real risk at the Strait of Hormuz has shifted from "can ships pass" to "can ships be reliably tracked" — VLCC per-voyage insurance has surged from $225,000 to $7.5 million, yet futures markets have barely moved.
The strait is open — so where is the risk?
Kpler trade-risk analyst Ana Subasic argues the market is asking the wrong question. The focus on whether the strait is open or closed misses a more fundamental issue: whether tankers can be reliably tracked.
GNSS spoofing — tampering with satellite positioning signals to corrupt a vessel's location data — is degrading voyage records at the source: port-call verification fails, risk-exposure mapping breaks down, voyage reconstruction becomes contested.
This means → even if a ship physically transits the strait, polluted position data leaves insurers and banks unable to confirm where the vessel went or what it encountered. Uncertainty converts directly into cost.
Iran's "mandatory insurance" — what is the real play?
According to Lloyd's List, Iran has announced mandatory insurance for all vessels transiting the strait. The underwriter is a newly created body called the Persian Gulf Strait Authority (PGSA).
The insurance is currently free to shipowners — funded by the Iranian government — but the documentation explicitly states PGSA reserves the right to charge premiums in the future. PGSA also holds exclusive power to issue transit permits and designate shipping lanes.
In plain terms = this is not a goodwill gesture. It is an upgrade from physical blockade to administrative gate-keeping — future passage may depend on Iranian approval.
One tanker owner told Lloyd's List: "This is madness — the whole situation is a mess."
How much has insurance spiked — and do futures know?
Malaysia's *New Straits Times* reports that pre-conflict, a VLCC's per-voyage insurance ran roughly $150,000–$225,000. Post-conflict, that figure has surged to $5 million–$7.5 million — a 30-fold-plus increase.
Futures prices, however, have not reflected this cost shock. A significant divergence has opened between paper and physical delivery prices.
This means → Kpler reads this as another case of "paper-market-to-physical-market disconnect" — the price traders see on screen and the cost shipowners actually pay are no longer telling the same story.
Can talks fix this — and what is the real risk variable?
The Trump administration's bombing threats against Iran and Tehran's negotiators walking away from the Swiss table again have pushed uncertainty higher still.
Kpler's Subasic frames the real question: who is transiting, when, under what risk conditions, and whether that risk creates material exposure for shipowners, charterers, insurers, banks, and cargo counterparties.
This reflects a deeper shift. The core issue is no longer whether the strait is passable. It is who can still afford the risk of this route in an environment of broken information and regulatory chaos — and that question will not be resolved by a single round of talks.
Content is for reference only, not financial advice.