**Economic Fallout on Israel Amidst Conflict with Iran
The economic repercussions on Israel following the conflict with Iran extend far beyond the exorbitant military expenditures. There is a hidden aspect that will make the cost of living more expensive: war risk insurance premiums for shipments have tripled, at a minimum, compared to just a week ago. The cost of a seven-day voyage to Israeli ports is between 0.7% and 1% of the vessel's value, compared to around 0.2% just before the outbreak of hostilities.
Each insurer will evaluate risks differently, but this will add tens of thousands of dollars in daily additional costs for each voyage. Israel relies heavily on maritime routes for a significant portion of its imports, which are transported to entry points like the Mediterranean ports of Ashdod in the south and Haifa, as well as the Red Sea port of Eilat. Nearly 30 vessels, including many cargo ships, are currently anchored in Haifa Bay.
Many shipping companies are already hesitant to navigate to Israel due to the higher risk profile. The Iran-backed Houthis in Yemen have declared that they will target any vessel linked to Israel, despite a ceasefire on American and British vessels in the Red Sea.
The bill may become even more salient in the event of navigation issues in the Strait of Hormuz. The merchant navy continues to pass through the Strait of Hormuz despite large-scale attacks, but some shipowners are seeking to avoid the region. In the past, Iran has threatened to close the Strait of Hormuz, a crucial passage, in retaliation to Western pressures. Any closure of the strait could restrict trade and impact global oil prices.
