•750 commercial ships reroute after Gulf attacks on oil tankers
By Steve Agbota
Following the ongoing crisis between the United States of America and Iran, Nigerian shippers will face the risk of paying over 400 per cent hike in war risk insurance and 40 per cent rise in freight rates, as shipping giants reroute vessels away from the Red Sea and Suez Canal, the major routes for cargo to and from Nigerian ports to Asia, amid escalating attacks in the Middle East.
This means that higher freight rates and insurance premiums will drive up the cost of imports landing at Lagos, Apapa and Tin Can Island, squeezing freight forwarders and clearing agents, while the consumers will bear the brunt.
Daily Sun learnt that over 750 commercial vessels, including heavyweights like CMA CGM, Hapag-Lloyd and others, are rerouting to avoid the Strait of Hormuz due to the war between Iran and the US and Israel in the Middle East.
As the ongoing crisis hurts global shipping, the International Maritime Organisation (IMO) urged vessels to avoid the Strait of Hormuz following attacks on two ships within the strategic waterway.
Meanwhile, maritime monitoring firms report that commercial traffic volumes through the strait have collapsed by approximately 70 per cent. More than 200 vessels, including roughly 150 oil and gas tankers, are anchored outside in a tense standoff, while around 170 containerships remain trapped inside.
Speaking to Daily Sun, the President of the Shippers Association of Lagos State (SALS), Nicodemus Odolo, said that the crisis will definitely affect the Nigerian shippers, saying that shippers would experience a hike in shipping costs due to the crisis.
“If there is a war, all the shipping lines, the route they apply and if it is going to come across the war zone, they will tell you they will take a lot of risk, if their ship will still be operating that line. And what it means is that everything will increase.
“Then they may decide to go and re-insure the ship, put in a higher value in re-insuring it and the premium they pay becomes part of the cost of operation. And for sure, every cargo they are going to pick will receive the increase. “So, freight is going to be on the increase, which is indisputable.
“Again, these nations, our major trading item or article with them is this oil. The crude oil, between America, Iran and all of them, they are trading in oil. And when there is war, there will be a disruption in the supply chain. “So, Iran will be producing oil, but cannot export to the countries because of the war. America, too, will suffer,” he said.
He added that the cost of fueling the ship and everything goes up, saying even the sailors, the captain, everybody on board the ship, everything will be on an increase.
“Insurance and all those have to be increased. So, the cost of doing shipping is going to be on the increase. Definitely, it is going to affect us, we the shippers in Nigeria,” he explained.
However, its official communique, the Sea Empowerment and Research Centre (SEREC) said that the ongoing escalation between the United States and Iran presents significant geopolitical and economic risks to global energy markets and maritime trade systems.
The Head of Research of SEREC, Eugene Nweke, said that any prolonged disruption could trigger sustained oil price volatility, freight rate escalation, war-risk insurance spikes, and global inflationary pressure.
He warned that marine war-risk insurance may spike by as much as 200 to 400 per cent in high-risk corridors, saying that prolonged disruption raises the spectre of global stagflation, high inflation combined with weakened economic growth.
He also warned that oil prices may range between $110 and $140 per barrel under sustained tension. Global freight rates could surge by 15 to 40 per cent, adding that emerging economies may face renewed inflation and currency depreciation risks.
Amid the crisis, he said one development stands out as potentially game-changing, and that is the Dangote Refinery, by reducing Nigeria’s dependence on refined fuel imports, the refinery directly lowers the country’s exposure to freight and insurance shocks, eases pressure on the naira, and could reduce imported fuel inflation by an estimated 1 to 2 percentage points.
According to him, it also positions Nigeria to expand refined product exports across West and Central Africa under the AfCFTA framework, at precisely the moment the continent is scrambling for supply alternatives.
He said if strategically managed, the refinery serves as a national economic stabiliser during external shocks,” SEREC said in its report, adding that the critical qualifier is policy coherence.
He recommended that the government should channel oil windfall gains into stabilisation funds and infrastructure, not recurrent expenditure; guarantee steady crude allocation to domestic refineries; strengthen maritime security coordination across the Gulf of Guinea; expand strategic petroleum reserves; and deepen regional trade integration to reduce overreliance on volatile extra-African shipping routes.
