One cargo from Yanbu to Korea has to get through five constraints. Each one sits on someone's book.

Take one hypothetical Suezmax and follow it from the load port to the discharge port.

The Hormuz bypass is usually described as a pipeline and a port. One cargo shows that it is a chain. Take a hypothetical Suezmax loading about one million barrels of Saudi crude at Yanbu, on the Red Sea, for Ulsan in South Korea. Bab el-Mandeb has been under a Houthi blockade since 20 July 2026, so the vessel cannot go south. It goes north through the Suez Canal, west through the Mediterranean, out past Gibraltar, down the Atlantic coast of Africa, around the Cape of Good Hope, and east across the Indian Ocean to the Strait of Malacca and on to Korea.

Each leg adds a different kind of limit, and each limit lands on a different part of the market.

1. The source: a pipeline and a terminal. Yanbu exports depend on the East-West pipeline, about 1,200 km long, which carries crude from the Gulf side of the kingdom to the Red Sea coast. Its nominal capacity is quoted anywhere between about 4 and 7 million barrels a day depending on the source. Drone attacks in mid-September damaged pumping stations, and flows fell to about 2 to 2.65 million barrels a day from about 5.5 million before the attack, with recovery to 3 to 4 million expected over weeks (The Cradle, 3 October). The pipeline restarted on 22 September at a low rate (Hydrocarbon Processing). Satellite imagery showed about 40 vessels at Yanbu and Al Muajjiz on 27 September, with nearly 10 million barrels loading (TankerTrackers, via Seatrade). One analyst notes that Red Sea coast refineries and power plants consume about 1.8 million barrels a day before any crude reaches an export berth, so export availability sits below pipeline capacity. For an insurer, this constraint sits mostly outside marine: it is a single-asset dependency of the kind that business interruption and political violence books carry.

2. The size limit at Suez. A Suezmax is defined by the largest laden vessel the canal accepts, with a draft limit of 20.1 metres. A fully laden VLCC exceeds that, so its cargo has to be split between ships or moved through the SUMED pipeline between the Red Sea and the Mediterranean. SUMED carried about 1.9 million barrels a day in August, near its maximum (Rio Times). A VLCC cargo of about two million barrels therefore becomes two Suezmax cargoes of about one million each, and each million barrels a day of Yanbu exports needs about one Suezmax loading a day. The consequence for accumulation is that the hulls, the cargo values and the canal transits all concentrate in one vessel class and one waterway.

3. The distance. The long route adds 8,716 nautical miles, a 123% increase. A laden leg of about 47 days, a ballast return of about the same length and four days in port gives about 98 ship-days per cargo on the long route, against about 46 on the direct route (our arithmetic, at 14 knots in both directions). Moving one million barrels a day from Yanbu to Korea by Suezmax therefore ties up roughly 98 ships on the long route against roughly 46 on the direct one. That is the mechanism behind charter rate spikes: more ship-days demanded for the same barrels. One reported fixture shows the scale: a 2026-built VLCC fixed for a Red Sea to South Korea voyage via Suez, carrying 270,000 tonnes at $55 million, or $634,000 a day (Seatrade Maritime). On about two million barrels that is roughly $28 a barrel in freight (our arithmetic on a single fixture, which may differ from the market average). About 15% of available VLCC capacity was also reported positioned in the Gulf of Oman for ship-to-ship transfers, which tightens the market further.

4. A chain of tail chokepoints. The voyage passes the Suez Canal, Gibraltar, the Cape of Good Hope and the Strait of Malacca. The 2021 grounding of the Ever Given showed that one vessel can obstruct the canal. More important is the geometry at the start. Yanbu sits inside the Red Sea, whose only sea exits are Bab el-Mandeb and Suez. In our routing graph, with both blocked, the vessel has no route out at all. That is a low-probability tail, included here to show the structure of the risk, and it is the scenario in which every Yanbu cargo is stranded at once. One industry bulletin also reports that Houthi forces have captured Red Sea islands and a port near the Bab el-Mandeb approaches (IFDC, 22 September), the kind of development that moves a tail without moving the base case.

5. The price and availability of cover. War risk at Yanbu was reported at about 3% of vessel value in late September, up from under 1% in July, against up to 7% for southern Saudi ports near the Yemen coast, 6 to 9% for Hormuz and 0.2 to 0.3% for non-Saudi-affiliated Red Sea tankers. The same report puts a Yanbu voyage at about $3 million in war risk premium against at least $100,000 before the conflict, and notes that the United States provides air cover for Hormuz transits and none in the Red Sea, where only EU patrols operate (Insurance Journal, 25 September). Reinsurance commentary on the Hormuz crisis shows how the structure of cover shifts as well as the price: annual war risk cover on Gulf policies converted to voyage-by-voyage, some P&I mutuals issued 72-hour cancellation notices to non-mutual entries, and reinsurers moved to a client-by-client approach with reduced line sizes (Howden Re, March 2026). The same report raises the question of whether coordinated strikes across several countries count as one occurrence, which determines whether political violence treaty limits are exhausted at once.

Extra ship-days and extra premium show up in places well beyond the tanker market.

We do not model price pass-through, and no single number below is the effect of the Yanbu route alone. They are the observable places where longer voyages, tighter ship supply and higher cover costs appear.

Freight and crude. After the September pipeline attack, Kpler reported Middle East Gulf to Asia VLCC rates of about $30 a barrel, against about $20 from the Gulf of Oman, a premium it ties to Hormuz transit risk. Brent traded at $103.37 on 2 October, up $37.41 on a year earlier (Fortune). Many forces sit behind that price, and the extra ton-miles on the Yanbu chain are one of them. Gulf crude exports were reported at about 80% of pre-war levels in late September, with about 40% of Gulf crude now bypassing the Strait of Hormuz against 17% before the war (as reported by Business Today on 5 October). A rising bypass share means more cargo on exactly the chain described above.

Fertilizer and food. The FAO Food Price Index averaged 136.0 points in September, up 1.5% on the month and 5.8% on the year, and the FAO cites transport disruptions and Strait of Hormuz uncertainty among the drivers. The AMIS Market Monitor points to elevated freight rates and firmer fertilizer markets. The IFDC bulletin of 22 September put Middle East granular urea at $470 to $480 a tonne FOB and described fertilizer shipments through Hormuz as effectively at a standstill, with farmers reducing application, delaying purchases or planting less. Those decisions feed through to harvests months later.

The long route more than doubles the days a cargo is exposed, but those days are not equally risky.

The same barrels spend about 47 days laden on the long route against about 21 on the short one, which is 2.2 times the ship-days. For an insurer that matters in three separate ways.

The oil-afloat figures are our arithmetic: daily flow multiplied by laden days, valued at the Brent price of 2 October 2026, and they ignore the return leg in ballast. The first consequence is accumulation. Even if the hazard on each day were unchanged, the same flow now keeps more than twice the value on the water at once, and it sits in the same hulls for longer.

The second is a mismatch with cover. Reports describe war cover being written voyage by voyage, with P&I cancellation notices as short as 72 hours (Howden Re). A voyage of 47 days passes through far more opportunities for terms, listed areas or notice periods to change than one of 21 days, so the premium agreed at loading may not describe the risk at discharge. We have not verified the cancellation wording of any specific clause, so treat this as a question to ask of a wording, not a finding about one.

The third point is a limit on the first two. Hazard is not spread evenly across the 47 days. It concentrates at the load port, in listed areas, at chokepoints and in port stays. Most of the extra 26 days are open ocean around Africa, so the longer route adds a great deal of time-related exposure (delay, charter hire, cargo condition, accumulation at any moment) and rather less casualty hazard per day. Scaling risk in direct proportion to days at sea would therefore overstate the casualty side and understate the delay side.

That is also the answer to whether risk scales linearly with time. Over short periods and small hazards it is a fair first approximation: with a constant daily hazard h, the chance of at least one event in t days is 1 minus exp(-ht), which is close to ht when ht is small. It stops being true when the loss is bounded by the value of the cargo and hull, when hazard varies by segment, and when events cluster, so that one incident raises the chance of the next. CAPE uses the linear form today. A segment-by-segment hazard with a cap is the better model, and it is the version we would run with a client's own assumptions.

The same voyage touches at least five lines of business.

Scale matters here. At about $100 million of crude per Suezmax cargo (roughly one million barrels at the recent Brent price of $103.37), a book holding twenty such cargoes carries about $2.0 billion of cargo value through the same canal, before any hull value (illustrative arithmetic). If those cargoes also sit under different underwriters, each underwriter sees a modest line while the market sees a concentrated one.

CAPE models two of the five links, and it understates this vessel for a reason worth stating.

We added the hypothetical vessel to CAPE as an illustrative case: a Suezmax carrying $100 million of Saudi crude, with full weight on the Suez and Malacca corridors. CAPE computes value at risk as cargo value, times the class exposure weight, times the vessel weight, times duration over 30 days, times severity.

Read this table with three caveats. First, the class weights, 0.25 for Suez and 0.33 for Malacca on a Suezmax, are fleet averages from an AIS transit analysis for the second quarter of 2024, so a vessel that is certain to use the canal is under-weighted by construction. Second, CAPE has no corridor for the pipeline, Gibraltar or the Cape of Good Hope, so three of the five links are invisible to the model. Third, the formula is linear in duration and severity and is not capped at cargo value. For this cargo the uncapped total would pass $100 million after about 52 days of full closure, which no real loss on one cargo can do, so the longer scenarios overstate the loss and should be read with that limit in mind. A client running its own assumptions would replace the weights with its own view of how often its cargoes touch each link, and would cap the result.

Higher premiums are a rational response to a real risk. The open question is whether the accumulation is visible.

Nothing in this analysis suggests that the market is pricing the Red Sea or Hormuz wrongly. A premium of about 3% of vessel value is a plausible response to a risk of this size. The practical gap is different: premium is set voyage by voyage, while the exposure accumulates across links, vessel classes and lines of business, and the same few waterways sit under many books at once.

That is where a scenario tool helps. For a given book, the useful questions are: how many cargoes and hulls touch each link, which of them share a single point of failure, and what happens to the total if a throttle on one link, such as the pipeline, coincides with a limit on another, such as the canal. Running those questions with your own assumptions on severity, duration and routing is a short exercise, and it is the one we are built for.