Core Viewpoint - The ongoing conflict between Israel and Iran has significantly impacted shipping costs and routes, with a notable increase in freight rates and potential insurance hikes due to heightened risks in the region [1][3][9]. Shipping Costs and Insurance - On June 13, the freight rate for oil tankers from the Middle East to China surged by 24%, reaching $1.67 per barrel, marking the largest single-day increase of the year [3]. - Insurance rates for shipping are expected to rise as underwriters may quickly adjust premiums based on perceived risks, despite current stability in the Red Sea and Strait of Hormuz [3][9]. - Shipping companies may begin imposing "safety surcharges" to cover increased insurance costs and potential disruptions caused by the conflict [3][4]. Shipping Route Adjustments - Many cargo ships are opting to avoid the Red Sea and the strategically important Strait of Hormuz due to the escalating conflict, leading to increased operational costs for those who choose to navigate these waters [4][5]. - The Strait of Hormuz is crucial for global oil transport, with an average of 20% of the world's oil passing through it, making any disruption potentially impactful on global energy prices and supply chains [5][6]. Industry Warnings and Recommendations - Industry organizations are advising shipping companies to prepare contingency plans and reassess routes in light of the conflict, with specific recommendations to avoid high-risk areas [9][10]. - The UK-based Ambrey has suggested that vessels near the Strait of Hormuz should consider rerouting and evaluate their affiliations, particularly with Israel, to mitigate risks [9]. - The U.S.-led Joint Maritime Information Center has urged shipping companies to review their routes and ensure crew safety while maintaining that commercial traffic continues to flow through the Strait of Hormuz [9].