The United States and Iran exchanged fire in the Strait of Hormuz on Monday, trading cruise missiles, drones and helicopter attacks in the most direct military confrontation between the two countries since the conflict began in February - as Iranian drones struck an Emirati oil terminal and a South Korean cargo ship caught fire in the strait, dealing another blow to an insurance market that Australian and New Zealand brokers have spent two months trying to navigate on behalf of clients exposed to disrupted fuel, fertiliser and cargo supply chains.

US Central Command chief Adm. Bradley Cooper told reporters that US Apache and SH-60 Seahawk helicopters destroyed six Iranian small boats after Iran launched "multiple cruise missiles, drones and small boats" at US Navy ships and at commercial vessels the American military was seeking to protect under President Trump's "Project Freedom" operation. Cooper said the US had established a one-way lane through the strait to allow commercial vessels that had been "held hostage" in the Persian Gulf for weeks to exit, though he declined to say how many ships had used it.

Iran's army chief, Maj. Gen. Amir Hatami, warned that any US aircraft carriers approaching Hormuz would be met with force. "The American aircraft carriers, with the stealth of radar silence, imagined they could approach the Strait of Hormuz; but our response was fire," he said on X. "Every inch of these waters is within the range of our will."

The kinetic exchange rattled oil markets and pushed Brent crude above US$111 a barrel. For Australian businesses already absorbing fuel surcharges and fertiliser price shocks since the strait effectively closed on 28 February, Monday's events signal that relief remains distant - and that insurance programmes arranged under pre-conflict assumptions need urgent review.

A drone strike on the VTTI oil storage terminal in Fujairah - the UAE's main bunkering port, jointly owned by IFM Global Infrastructure Fund, Vitol Group and ADNOC - caused a major fire that injured three Indian nationals, Emirati authorities said. All three were taken to hospital. Separately, ADNOC confirmed that one of its tankers was struck by two Iranian drones off the coast of Oman. The UAE issued a missile threat warning and said its military had intercepted three Iranian missiles - the first such intercepts since the country declared its airspace free of threats nearly a month ago.

South Korea's foreign ministry confirmed an explosion and fire aboard the HMM Namu, a Panama-flagged cargo vessel operated by Korean shipper HMM, in the strait itself. There were no reported casualties, and HMM said the fire broke out in the engine room. The development is particularly pointed for Australia: South Korean and Singaporean refiners are among the primary suppliers of refined fuel products to Australian importers, and the HMM Namu incident underscores that vessels serving those supply chains remain in harm's way.

The US military said two US-flagged merchant ships had transited the strait safely. Iran's Revolutionary Guards dismissed those claims as "baseless" and "outright lies," saying no commercial vessels had crossed. The contradictory statements left the actual status of the waterway - and the credibility of Project Freedom - in genuine doubt.

Hormuz Crisis — May 4, 2026

A day of fire at the world's most critical chokepoint

Timeline of attacks, military exchanges, Iranian statements and market moves

Pre-dawn

"Project Freedom" announced

Trump posts on Truth Social overnight, declaring the US Navy will guide stranded ships out of the Persian Gulf. Guided-missile destroyers, aircraft and drones deployed.

Early AM

Iran

Iran "redefines" Hormuz control zone

Tasnim news agency announces Iran has set new maritime borders within the strait. All vessels must coordinate passage with Iranian armed forces or face attack.

Morning

Attack

ADNOC tanker struck off Oman

An empty ADNOC crude tanker is hit by two Iranian drones while attempting to transit near the strait, in waters off the Omani coast.

~8:46 AM

Attack

UAE issues first missile warning since ceasefire

The UAE's military activates a missile threat warning — the first since the April 7 ceasefire. It is unclear whether the warning responds to the tanker attack or a separate incoming threat.

~9:30 AM

Attack

Iranian drones hit VTTI terminal in Fujairah

A major fire breaks out at the VTTI oil storage terminal in Fujairah — a port outside the strait and the region's main bunkering hub. Three Indian nationals injured. The UAE intercepts three Iranian missiles over its waters.

~9:50 AM

Attack

HMM Namu struck in the strait

South Korea confirms an explosion and fire aboard the HMM Namu, a Panama-flagged cargo vessel in the Strait of Hormuz. No casualties. Fire began in the engine room.

Mid-morning

Iran

Iran fires on approaching US warship

Fars reports Iranian forces fire on a US Navy vessel approaching the strait with cruise missiles, rockets and drones. Initial claim a US ship was struck; Washington denies it. Iran later calls the fire "warning shots."

Mid-morning

Markets

Brent crude surges above $111

International benchmark Brent rises as much as 5% on reports of fresh confrontations, trading above $111 a barrel. Prices move volatilely between 2% and 5% higher through the morning session.

Late morning

CENTCOM confirms six Iranian boats destroyed

Adm. Bradley Cooper briefs reporters: US Apache and Seahawk helicopters destroyed six Iranian small boats. Cooper clarifies there are no formal "escorts" — rather a multi-layer defensive package of ships, aircraft and electronic warfare.

Late morning

Iran

Iran army chief warns off US carriers

Maj. Gen. Hatami on X: "The American aircraft carriers imagined they could approach the Strait of Hormuz; but our response was fire." Revolutionary Guards deny any commercial vessels have transited, calling US claims "baseless."

Afternoon

Two US-flagged merchant ships reported through strait

US Central Command says two US-flagged commercial vessels have crossed and are "safely headed on their journey." Iran says no crossing took place. Hapag-Lloyd says transit remains impossible.

Ongoing

Diplomacy

Iran reviews US response to 14-point peace plan

Iranian state media confirms Washington conveyed a response via Pakistan to Tehran's proposal calling for a full ceasefire, US withdrawal, lifting of the blockade and sanctions, and reparations. Trump indicated the plan does not go far enough. No talks scheduled.

Attack / Strike

US action

Iran action

Market move

Diplomacy

Sources: Bloomberg, Reuters, CNN, US Central Command, Iranian state media. Times are approximate MDT. Sequence reconstructed from multiple wire reports as of May 4, 2026.

What this means for Australian and New Zealand brokers

The Hormuz crisis has been testing Australian insurance programmes across multiple lines since late February, and Monday's events deepen every one of those pressures.

Peter Beard, manager of technical services at Insurance Advisernet, told the National Insurance Brokers Association of Australia that the crisis is exposing coverage gaps across marine, agriculture, property, transport and aviation lines, and is prompting brokers to review sums insured, war risk positions and business interruption triggers. His warning, delivered before Monday's escalation, now reads as more urgent. Standard Institute Cargo Clauses exclude war and warlike operations, leaving shipments originating in or transiting Gulf waters without protection for conflict-related losses unless additional war cover has been separately arranged - a gap many clients discovered only after the strait closed.

In transport and logistics, brokers are reporting freight rate increases of around 30% to 40%. Existing goods-in-transit sublimits may no longer capture the higher values at risk per movement, and fleet agreed values set before the crisis may not reflect current replacement costs. Urea fertiliser prices have moved from around US$475 to US$680 per tonne since late February, putting further pressure on agricultural business interruption schedules that require physical damage as a trigger and may not respond to input supply disruption alone.

The Australian government has stepped in with its own backstop. Export Finance Australia was given expanded powers in early April to underwrite fuel and fertiliser imports for regional and independent suppliers, after Prime Minister Anthony Albanese warned that the conflict had caused the largest spike in fuel prices in history. Australia imports the bulk of its refined fuel from South Korean and Singaporean refiners - the same supply chains now at elevated risk - and while the near-term supply outlook remains manageable, the government has been explicit that a prolonged conflict will worsen outcomes significantly.

For New Zealand, which has even less domestic refining capacity and relies heavily on imported fuel and urea, the exposure is structurally similar and in some respects more acute, given the country's thinner strategic reserves and greater dependence on seasonal agricultural inputs.

A ceasefire that never really opened the strait

The Strait of Hormuz, through which roughly a fifth of the world's oil and liquefied natural gas moved before the war began on 28 February, has been commercially closed for longer than it has been militarily dangerous. When US and Israeli forces launched strikes on Iranian targets on that date, war-risk premiums surged fivefold within 48 hours, the Lloyd's Market Association's Joint War Committee redesignated the entire Arabian Gulf as a conflict zone, and tanker traffic collapsed by more than 80 per cent before Iran's physical blockade was even formally declared.

That dynamic - in which the insurance market closed the strait before the Iranian navy did - has defined the two months since. A ceasefire announced on 7 April changed the political temperature but did little to reopen commercial shipping lanes. Coverage must be renegotiated individually for each vessel, on a voyage-by-voyage basis, with fresh actuarial assessments made by each layer of the reinsurance chain. Capacity withdrawn at the treaty reinsurance level must be reinstated through negotiation, not by political announcement.

Before the war, insuring a very large crude carrier for a Hormuz transit cost roughly 0.2 per cent of the vessel's hull value. Within days of the first strikes, those rates climbed to between 1.5 and 3 per cent of hull value, with vessels deemed to have American, British or Israeli connections charged as much as 5 per cent. For a tanker worth US$150 million, that is an insurance bill of up to US$7.5 million for a single voyage. Monday's attacks are likely to push those numbers higher still.

The attack on Fujairah carries particular significance. The port lies outside the strait on the Gulf of Oman side, and had been one of the few remaining operational bunkering and storage hubs in the region - a staging point that vessels rerouting away from Hormuz had been using as an alternative. Monday's drone strike removes that assumption and extends the conflict's insurance footprint beyond the strait itself. For Australian importers whose cargo was already rerouting through the Gulf of Oman, the geographic scope of the uninsurable zone has just expanded.

Situation Map — May 4, 2026

The Strait of Hormuz and Monday's attacks

Fujairah lies outside the strait — it was meant to be the safe alternative. Monday changed that.

Attack site

US military action

Iranian action

US enhanced security zone

Map is illustrative. Attack locations are approximate based on wire reports. The strait narrows to roughly 33km at its narrowest point between Iran and Oman's Musandam peninsula. Sources: Bloomberg, Reuters, CNN, US Central Command, May 4, 2026.

The government backstop - and its limits

In March, the Trump administration directed the US International Development Finance Corporation to provide political risk insurance to keep commercial shipping moving. Chubb was named as lead underwriter for the facility, which was structured to provide war hull, war protection-and-indemnity and war cargo cover for eligible vessels transiting under conditions approved by the US government. The DFC later expanded the facility's capacity to US$40 billion by bringing in six additional insurers - Travelers, Liberty Mutual, Berkshire Hathaway, AIG, Starr and CNA.

The facility is structured around US-flagged or US-approved vessels and requires detailed disclosure of vessel origin, destination, beneficial ownership and cargo. Australian and New Zealand importers whose goods are moving on non-US-flagged vessels, or whose supply chains run through carriers not approved under the scheme, have limited access to the backstop. The vetting process has also been slow, and it was not designed to respond to the kind of rapid escalation seen on Monday.

Calvin Gray, global head of marine at Intact Insurance, has warned that the conditions required for stable, insurable passage remain absent. Writing before Monday's strikes, he said the strait may be "officially open" without being anywhere near normal. "Shipowners are rightly cautious, and insurers will take the same approach," he said. "Cover will return where voyages are considered safe, but that threshold has not yet fully been met."

Monday's events moved that threshold further away. The container shipping group Hapag-Lloyd said it still considered transit through the strait not possible. The International Maritime Organization has estimated that hundreds of commercial vessels and as many as 20,000 seafarers have been unable to transit the strait since the conflict began.

Legal complexity compounds the market problem

A separate layer of difficulty is emerging around how losses are classified - and who pays them. Mahmoud Abuwasel, an international disputes partner at Wasel & Wasel, has warned of a growing divergence between how governments define the Hormuz situation and how insurers interpret liability. "We colloquially talk about it as a war, but from the United States' official position, it's not a war," he said. "That distinction matters because it directly affects whether war-risk provisions in insurance policies are triggered."

The distinction has direct consequences for Australian and New Zealand policyholders filing claims now. It echoes earlier precedent: during the Yugoslav conflict in the 1990s, arbitration upheld an insurer's position that a conflict not formally declared as a war by NATO powers did not trigger war exclusion clauses. The same question is live today, and Beard has recommended that brokers keep detailed file notes of reinstatement value discussions, war risk advice, business interruption trigger explanations and supply chain extension options - including where clients decline changes - as protection against future professional indemnity claims.

For marine brokers, a central concern is coverage gaps for loss caused by delay rather than direct physical damage - a category that is affecting a far larger number of cargo owners than those whose vessels have been physically struck. Nick Francis, marine partner at Kennedys, has warned that constructive total loss issues will arise for vessels trapped in the Gulf as the 12-month deprivation threshold approaches. Roughly 750 vessels worth approximately US$25 billion were in the Persian Gulf when fighting began on 28 February, according to figures from Aon.

Marine War-Risk Insurance — Hormuz Transits

The cost of crossing

War-risk premium as % of hull value for a Very Large Crude Carrier transiting the Strait of Hormuz, Feb–May 2026

Pre-war baseline

~0.2%

of hull value per transit

Peak rate (US/UK-linked vessels)

up to 5%

of hull value per transit

Cost on a $150m tanker

$7.5m

per single voyage at peak

①

28 Feb — War begins: Within 48 hours of US-Israeli strikes on Iran, war-risk premiums surged fivefold. Seven of the 12 P&I clubs covering 90% of global tonnage issued 72-hour cancellation notices. Vessels with US, British or Israeli connections were quoted up to 5% of hull value. Tanker traffic through the strait collapsed by over 80%.

②

7 Apr — Ceasefire: The ceasefire reduced political pressure modestly. Rates edged lower, but underwriters maintained voyage-by-voyage cover requirements. The Lloyd's Market Association noted the strait was "officially open" without safe or consistent transit having been demonstrated. Coverage had to be renegotiated individually — it could not be restored by political announcement alone.

③

4 May — Fujairah struck: Monday's attacks on the VTTI terminal in Fujairah and the HMM Namu in the strait, combined with the first direct exchange of fire between US and Iranian forces, are expected to push rates sharply higher. Fujairah had been priced as a lower-risk alternative to strait transits — that assumption no longer holds.

Sources: Insurance Business, Lloyd's Market Association, S&P Global, McGill & Partners, Kpler. Rates are indicative and vary by vessel flag, ownership, cargo and insurer. Hull value basis: VLCC ~US$138–$150m. May 4 figure estimated pending market repricing. Chart is illustrative.

The geopolitical deadlock

At the centre of the Hormuz standoff is an impasse that Monday's attacks deepened rather than resolved. Iran says it will only reopen the strait after the US lifts its naval blockade on Iranian ports. Washington wants Tehran to act first. A shaky ceasefire has been in place since 7 April, but attempts to arrange further face-to-face talks have failed.

Iran is reviewing a US response to a 14-point proposal - conveyed via Pakistan - that reportedly calls for a complete end to the conflict within 30 days, the withdrawal of US forces, the lifting of the maritime blockade, the removal of sanctions and the payment of reparations. The nuclear issue was not included. Trump said over the weekend that the proposal would not be enough to satisfy him.

Cooper was careful to reframe the nature of the American operation on Monday. There are no ship-by-ship "escorts," he said - rather, the US has assembled "multiple layers" of protection including ships, helicopters, aircraft, airborne early warning and electronic warfare. "I think we have a much better defensive arrangement in this process," he said. The distinction matters for insurers: a layered defensive perimeter is harder to price than a named-vessel convoy, and the legal and underwriting implications of vessels operating inside a US-defined "enhanced security area" without a formal escort remain untested.

Monday's attack on Fujairah - a port that had remained outside the direct conflict zone and was considered one of the safer alternatives to the strait - is the clearest signal yet that the geographic scope of the crisis is widening, not narrowing. For Australian and New Zealand brokers with clients exposed to Middle East supply chains, that means the portfolio triage that began in late February is not finished. It has barely started.

China, meanwhile, has ordered its companies to ignore US sanctions on private oil refiners linked to the Iranian oil trade, adding a further dimension to a crisis that is increasingly drawing in the world's major economies - and reshaping the flows of LNG and refined products on which Australia's Asia-Pacific neighbours, and by extension Australian export markets, depend.