The insurance market had barely begun pricing the Strait of Hormuz back into something resembling normality when, early on Monday morning, the second chokepoint declared itself open for war.

Yemen's Houthi movement has announced a complete ban on Israeli-linked maritime navigation in the Red Sea, stating that any movement by Israeli vessels would be treated as a military target. The declaration, broadcast on the group's Al-Masirah satellite channel and accompanied by a claimed missile strike on targets in Jaffa, transforms what had been a latent threat into a formal blockade posture - and confronts marine war underwriters with a scenario they have long modelled but hoped not to face: simultaneous disruption to both the Strait of Hormuz and the Bab el-Mandeb Strait.

The two waterways together carry an estimated 30% of global container shipping and approximately 22% of the world's seaborne oil supply, according to analysis by The Middle East Insider. A combined disruption places an estimated US$10 billion per day of global trade at risk.

A threat years in the making

The Houthis' return to maritime aggression was, to those in the insurance market, a matter of when rather than if. The group had paused large-scale attacks on commercial shipping in October 2025 following a Gaza ceasefire - but war risk premiums in the Red Sea, which had surged 20-fold from their pre-crisis baseline in January 2024, remained substantially elevated throughout that period of relative calm. As Insurance Business UK reported in April, a ceasefire was never going to be enough to reopen the insurance market. When Maersk, one of the world's largest shipping lines, stopped attacks from resuming in 2025, it waited two full months before sending a single vessel back through the Red Sea.

The group had also acquired considerably more dangerous tools during the interim. By early 2026, Houthi forces possessed Iranian-supplied anti-ship ballistic missiles with a range of 200 kilometres, sea-skimming cruise missiles, and one-way attack drones capable of striking vessels anywhere in the southern Red Sea, according to analysis from The Middle East Insider. Their targeting had grown more accurate and deadly - the July 2025 sinkings of the Magic Seas and Eternity C, two Greek-operated bulk carriers, marked a significant escalation in lethality and left four seafarers dead.

"There won't be an announcement when the ceasefire ends," Ellis Morley, associate director of cargo and commodities at Howden Insurance, wrote in a Kpler analysis in November 2025. "The market should expect a resumption of hostilities to be signalled by a coordinated drone and missile strike, not a press release." Monday's declaration is as close to a press release as the Houthis are likely to issue.

What the market faces now

Before the Houthis began targeting Red Sea shipping in late 2023, war risk premiums for vessels transiting the corridor sat at a nominal 0.05% of hull value - so negligible that many underwriters waived the cost altogether. By the peak of the 2024 crisis, rates had risen to 1% of hull value per seven-day voyage, meaning a single transit for a vessel worth US$100 million could cost US$1 million in war risk cover alone, according to data cited by Marsh McLennan.

That pricing had eased somewhat during the months of relative calm. It will not stay eased. BIMCO, the world's largest international shipping association, warned at the outset of the February 2026 Iran conflict that war risk premiums would rise sharply if Houthi attacks resumed, and that vessels with business connections to US or Israeli interests would likely struggle to obtain cover at any price. Chief Safety and Security Officer Jakob Larsen cautioned that the threat was not limited to directly affiliated vessels: "Ships with business connections to US or Israeli interests are more likely to be targeted, but other ships may also be targeted deliberately or in error."

The Bab el-Mandeb Strait itself - just 18 miles wide at its narrowest point, and carrying approximately 12% of global trade by value each year - is already classified as a listed area by the Joint War Committee of the Lloyd's Market Association. That classification permits, but does not require, underwriters to apply additional premiums. In practice, Monday's declaration is likely to trigger fresh seven-day cancellation notices and another round of emergency repricing, mirroring the market response that followed the initial escalation in February.

The double chokepoint problem

What makes Monday's development structurally different from every previous episode of Red Sea disruption is its context. The Houthis are not acting in isolation. They are entering a conflict already causing severe disruption to the Strait of Hormuz, where protection and indemnity war risk cover was effectively withdrawn in early March and traffic fell to near zero. The two crises now feed each other.

Ships that rerouted from the Strait of Hormuz to avoid Iranian waters now face the possibility of running into Houthi-controlled waters at the other end of their diversion. The Cape of Good Hope route - already adding 10 to 14 days and an estimated US$1.2 to US$1.8 million in additional fuel costs per round trip, according to analysis from the Observer Research Foundation - becomes not just the preferred option but for many operators the only one. Saudi Arabia's Yanbu terminal on the Red Sea, a vital alternative export route for crude oil, is now itself exposed to Houthi missile range.

Al Habtoor Research Centre analysis warned in March that a full blockade of the Bab el-Mandeb would force European economies to draw down strategic reserves, accelerate emergency LNG procurement, and absorb significant consumer price inflation. Qatari LNG destined for European markets - approximately 30 million tonnes per year - relies entirely on this corridor.

The coverage gap widens

For cargo owners and freight operators beyond the largest multinationals, Monday's declaration deepens a coverage crisis that the insurance market has struggled to address throughout this conflict. As Insurance Business UK has previously highlighted, standard business interruption policies do not respond to pure delays or precautionary rerouting - events generate no physical loss or damage, and so fall entirely outside policy triggers. The financial exposure from rerouted voyages, missed delivery windows, and supply chain dislocations can be enormous. The insurance response, in most cases, is nothing.

Nor are the major carriers insulated from the commercial consequences. Maersk reported a US$153 million loss in its Ocean division in the fourth quarter of 2025 - its first quarterly loss in years - as it absorbed the cost of Cape of Good Hope diversions. The company issued 2026 guidance ranging from a US$1.5 billion loss to a US$1 billion profit, a spread that reflects precisely the kind of uncertainty now deepening once more.

What comes next

The Lloyd's market has activated its major event response protocol for the broader Iran conflict, and underwriters are already operating on short-notice repricing cycles - 24-hour quote terms rather than the standard 48 - to manage exposure in a risk environment described by Munro Anderson of Vessel Protect, part of Pen Underwriting, as "de facto" closure driven by perception as much as physical blockade.

A formal Houthi declaration of a Red Sea ban changes that calculus. It is no longer a question of perceived threat. The threat has been stated, missile strikes against Israel have been claimed, and the market will price accordingly.

The path back from here - for shipping, for insurers, and for the supply chains that depend on both chokepoints remaining open - is measured, as Howden's Morley noted last November, in quarters rather than weeks. On Monday morning, that clock reset.