Expect to see rising prices for fuel and many goods as a result of the Middle East war, says a shipping industry veteran.

Jens Alers, an independent, Bermudian-based maritime consultant, said the severity of the inflation consumers will experience will depend on the duration of the military conflict.

Several ships in the Persian Gulf have been attacked by Iranian forces and major shipping companies including MSC, CMA CGM and Hapag-Lloyd have suspended bookings in the Middle East.

About one-fifth of global oil supply is shipped through the Persian Gulf, and a significant proportion of natural gas too.

Inflation will result from constraints on oil and gas supply, as well as a spike in shipping costs, Mr Alers said.

The first inflationary impact would be at the pump, he said.

“With nothing going through the Strait of Hormuz, we are effectively eliminating about one-third of seaborne oil exports,” Mr Alers said.

“Qatar has closed the world’s largest LNG (liquefied natural gas) facility, Ras Laffan, which provides about 20 per cent of Europe’s supply.

“You cannot turn a spigot on somewhere else to replace all of that supply and so, this will lead to shortages and increases in the price of oil and natural gas.”

By early yesterday afternoon, the price of Brent crude oil was above $82, having risen 17 per cent since the first joint Israeli-US strikes on Iran on Saturday.

Benchmark European natural gas prices spiked 45 per cent yesterday, almost doubling the price at Friday’s close.

Shipping costs will rise, Mr Alers said. “The cost of operating a ship will go up for three main reasons. Most significantly, the cost of fuel and lubricating oils will increase.

“Also, oil is at the base of so many products that we that we use on board ships or build into ships. That will drive up the price of operations.

“And then, the cost of insuring ships will increase, not only for anything directed towards the Middle East, but generally. Some insurance you won't be able to buy. Insurers basically will just refuse to cover you if you have any intention of going anywhere near the conflict region.

“But I think the general impact on hull and machinery coverage, as well as P&I, and third-party liability insurance cover, will be felt for a while.”

War risk insurance rates for the Middle East Gulf and the Gulf of Oman rose from 0.1 per cent of hull value to about 1 per cent in the aftermath of the Israeli-US strikes on Iran and retaliatory attacks by Tehran, according to a report by TradeWinds.

Leading maritime insurance mutuals — including Gard and Skuld, who each have a presence in Bermuda — said they would withdraw war risk insurance cover for ships entering the Persian Gulf, starting tomorrow. This followed reinsurers cancelling their coverage.

However, for shipping companies, the breakout of war can also bring benefits, Mr Alers added.

Oil tanker spot rates, which surged already this year, are expected to keep rising as the war continues, benefiting several Bermudian-based tanker operators, such as Nordic American Tankers and Teekay Corporation.

For container ships and LNG carriers, most operate on multiyear contracts with fixed rates, Mr Alers said. However, the total paid by the customer will increase in cases where ships have to change their routes to avoid conflict zones, ramping up “ton miles” — a unit of measurement representing the transport of one ton of cargo over a distance of one mile.

Mr Alers cited the example from when Russia invaded Ukraine four years ago. Egypt could no longer receive most of its wheat from Ukraine — a three-and-a-half-week voyage away — forcing them to use alternative suppliers, mostly in North and South America — nearly four weeks away.

This not only raised shipping costs, it also stretched fleets, creating shortages on the market, further driving up prices. Similar scenarios could unfold from today’s conflict — for example, ships opting to sail around the Cape of Good Hope, rather than going through the Suez Canal, adding days to their voyages, Mr Alers said.

The containers shipping companies serving Bermuda — even though they work far away from the war — would also see their operating costs rise, at least because of rising fuel costs, Mr Alers added.

“The big question is: how long will the war last?” Mr Alers added. “If President Trump is right about four to five weeks, and hostilities cease, then the question is: how long does the shipping market take to drop back to normal?

“That can take a long time. And so, I would think that inflation in operating expenditure for ships is going to accelerate significantly.”

Peter Sand, chief analyst of Xeneta, the ocean and air freight rate benchmarking and market analytics platform, added his insights.

He said: “The average citizen may experience this disruption in many different ways as it does affect goods differently. But the one thing that's for sure - it will get more expensive.”

He said as a result of the new issues, earlier, ongoing disruptions, will last longer.

He noted: “We already see in Xeneta data that freight rates are going up - as they always do when a crisis disrupts maritime supply chains. Mostly for trades in the Middle East region - but also to a less extent on other trades.

“This is fairly normal as we still don't know the full extent of a developing war around the Arabian Gulf. The landed cost of goods goes up, but it may also extend transit times for already on water cargoes as well as cargoes being shipped in coming weeks and months.”

There has been a deterioration in the reliability of container shipping services and regional ports are facing congestion.

Mr Sand said: “Specifically, we have seen multiple surcharges suggested by carriers ranging from $1,500 to $4,000 per container. Also suspension of booking into the Middle East is seen from several carriers.

He added: “The frequency and severity of disruption have surely gone up for the past decade. This is challenging all logistics professionals, shippers, freight forwarders and carriers.

“A way to handle some of this uncertainty is setting up just-in-case supply chains as a supplement to just-in-time.”