On March 2, 2026, Maersk suspended all cargo acceptance to and from the UAE, Oman, Iraq, Kuwait, Qatar, Bahrain, and Saudi Arabia. Hapag-Lloyd introduced a War Risk Surcharge of $1,500 per container. The third-largest container shipping company in the world, CMA CGM, followed with a $2,000 Emergency Conflict Surcharge. Within 48 hours, the commercial architecture connecting the Gulf to global supply chains had been repriced, restricted, or shut down—not by military force, but by the decisions of marine insurers in London and Oslo who cancelled war risk coverage for the entire region.
For the UAE, the consequences were immediate and concrete. Container bookings to Jebel Ali—the Gulf’s dominant transshipment hub and a linchpin of the country’s non-oil economy—were frozen. Fujairah Port, the strategic oil bypass terminal built to keep exports flowing if the Strait of Hormuz was ever disrupted, was itself struck by Iranian drones on March 4. Food import vessels, automotive shipments, aluminium cargo, and re-export consignments all faced the same coverage withdrawal as crude tankers, because insurance cancellation does not distinguish between commodities. The economic diversification model that Abu Dhabi and Dubai have built over decades, a combination of logistics hubs, free zones and global connectivity,turned out to be tethered to a single 21-mile strait and a single market’s willingness to insure passage through it.
The Insurance Cascade
The sequence was rapid. Following coordinated U.S. – Israeli airstrikes on Iran on February 28, war risk premiums surged fivefold within hours—from 0.2 percent to 1 percent of hull value—adding roughly $800,000 per voyage for a standard supertanker. By March 1, multiple major P&I (Protection & Indemnity) clubs had cancelled war risk cover entirely: Norway’s Gard and Skuld, Britain’s NorthStandard, the London P&I Club, and the New York–based American Club. On March 3, Lloyd’s Joint War Committee expanded its high-risk designation to include waters around Bahrain, Djibouti, Kuwait, Oman, and Qatar. The entire Persian Gulf became a conflict zone in underwriting terms. Tanker traffic through Hormuz collapsed by over 90 percent.
The critical point for UAE stakeholders is the distinction between expensive transit and impossible transit. A premium increase is a cost that can be absorbed or passed on to customers. Coverage cancellation is a binary event: without P&I cover, a vessel cannot enter port, cannot access financing, and cannot be chartered. When multiple clubs cancel simultaneously, vessels are not repriced—they are removed from the trade lane entirely.
The UAE’s Triple Exposure
The crisis revealed that the UAE faces three distinct but interconnected vulnerabilities, each operating through the same chokepoint.
The energy bypass was targeted directly. The UAE’s Abu Dhabi Crude Oil Pipeline to Fujairah was built as strategic insurance against precisely this scenario—a way to export oil without transiting Hormuz. But as Kate Dourian reported in MEES, Iranian strikes on the Fujairah storage and bunkering hub on March 4, demonstrated that bypass infrastructure is itself still vulnerable. The strike did not destroy the pipeline, but it compromised the terminal operations that make it functional as an export route. Fujairah also serves as the region’s primary ship bunkering hub; its disruption cascaded into vessel fueling and servicing operations across the lower Gulf. The lesson is an uncomfortable one: physical bypass infrastructure does not provide strategic resilience if it remains within range of the adversary that controls the chokepoint.
Container transshipment has no bypass at all. Jebel Ali is the world’s ninth-largest container port and the Gulf’s dominant transshipment hub. Khalifa Port serves as its deep-water complement. Both depend entirely on vessels entering and exiting the Gulf through Hormuz. Unlike crude oil, which can at least partially be rerouted via pipeline, container traffic has no overland alternative. When Maersk suspended cargo acceptance across the Gulf, it was not just oil tankers that stopped—it was the manufactured goods, consumer products, re-exports, and intermediate components that flow through the UAE’s logistics infrastructure and underpin its non-oil GDP. The economic diversification strategy that Abu Dhabi and Dubai have pursued for decades is structurally tethered to the same chokepoint as the oil economy it was designed to complement.
The insurance market does not discriminate by commodity. When P&I clubs cancel war risk cover for a region, the cancellation applies equally to crude tankers, LNG carriers, container vessels, dry bulk carriers, and vehicle transporters. There is no sectoral exemption. The UAE’s automotive re-export business, its aluminium and metals trade, its food import supply chain, and its role as a Gulf distribution hub for multinational companies all depend on insurable maritime access. A single insurance market decision can simultaneously disrupt energy exports, container logistics, food security, and industrial supply chains, a breadth of impact that no conventional military action could achieve as efficiently.
Gulf Neighbors and Comparative Vulnerability
The UAE’s exposure, while severe, is not the most acute in the region. Kuwait has no bypass pipeline and no transshipment alternatives; its entire export capacity, including refined products from the al-Zour refinery that has supplied Europe since the loss of Russian products, depends on Hormuz. Iraq’s 3.4 million barrels per day in exports flow almost entirely through southern Gulf terminals; the country had already shut down part of its Rumaila field by March 3. Qatar’s LNG production at Ras Laffan was directly attacked. Saudi Arabia retains the largest bypass capacity, the East–West pipeline to Yanbu can carry 5 million barrels per day, expandable to 7 million, but Red Sea exports remain vulnerable to a potential resumption of Houthi attacks. The UAE’s position is intermediate: it has more alternatives than Kuwait or Iraq, but fewer than Saudi Arabia, and its economic model is more exposed to container disruption than any of its neighbors.
The Sovereign Backstop Question
On March 3, President Trump announced that the U.S. Development Finance Corporation would provide political risk insurance for Gulf maritime trade, alongside naval escorts. The market responded: VLCC freight futures dipped on the announcement. But the episode raises a question that Gulf policymakers should consider carefully. Dependence on a single external sovereign guarantor for maritime access to one’s own ports introduces a vulnerability of a different kind. U.S. government-backed insurance depends on political will that can shift with electoral cycles, diplomatic negotiations, or strategic reprioritization. The guarantee was offered 72 hours into the crisis; it could be modified or withdrawn with similar speed. For the UAE, the question is whether a regional insurance mechanism, potentially coordinated through the GCC or bilateral arrangements, could provide more durable access to maritime coverage than ad hoc reliance on Washington.
Policy Priorities for the UAE
The Hormuz crisis suggests five areas requiring immediate attention from UAE policymakers and security planners.
First, integrate insurance market signals into national risk assessment. War risk premiums for Hormuz had risen 60 percent above their 2024 baseline by mid-2025, months before the strikes. JWC circulars and P&I club notices are publicly available intelligence. Combined with the shadow fleet monitoring capabilities already under development, AWRP (Additional War Risk Premium) tracking would give UAE security planners earlier warning of chokepoint disruption than conventional indicators.
Second, strengthen Fujairah against direct targeting. The bypass pipeline is only as resilient as its terminal infrastructure. Air defense, redundant storage, and dispersed bunkering capacity should be treated as critical national security assets, not commercial facilities.
Third, stress-test the container logistics network against insurance withdrawal. Jebel Ali and Khalifa should model scenarios in which P&I coverage is cancelled for the Gulf for 30, 60, and 90 days. What is the economic cost? What alternative arrangements, for example, temporary transshipment through Salalah, Jeddah, or East African hubs, could partially substitute?
Fourth, explore regional insurance coordination. The GCC’s collective exposure to Hormuz disruption creates a shared interest in a regional war risk facility that could provide bridge coverage during commercial market withdrawal.
Fifth, treat food supply chain resilience as a national security function. The UAE imports approximately 90 percent of its food. When marine insurance is cancelled for the Gulf, food import vessels face the same coverage withdrawal as oil tankers. Strategic food reserves, pre-positioned supply contracts through non-Hormuz routes, and diversified sourcing should be evaluated in light of the March 2026 experience.
The 2026 crisis demonstrated that the UAE’s economic security is only as durable as the insurance market’s willingness to cover vessels transiting the Strait of Hormuz. The question for policymakers is not whether it will happen again, but whether the UAE will be better prepared when it does.
