Mauritius Experiences Bunkering Boom as Middle East Instability Persists
As instability in the Middle East persists, more ships take the Cape Route rather than the Suez Route serving the Asia-Europe maritime trade. The Houthi attacks in the #RedSea are now compounded by the blockade of the #HormuzStrait in the context of the Iran-US conflict.
In light of the higher risk in the Middle East, underwriters have bumped up the insurance rates for ships in the region from 0.05% to 1.5% of the hull value. Before the conflicts, the base rate could be as low as 0.02%. In some extreme cases, the premiums have reportedly soared up to 7.5%, while some companies have simply refused to give quotes.
Since the escalation of the Israel-Hamas tension, the Houthis in Yemen initiated attacks on ships in the Rea Sea in October 2023. Shortly after, we note a significant increase in bunkering calls to Port Louis during 2024. That number remain more or less the same in 2025 as the insecurity in the Middle East region persists.
| 2023 | 2024 | 2025 | |
|---|---|---|---|
| Bunkering Calls | 1,945 | 2,850 | 3,117 |
| Est. Fuel Sales Tonnes | 500,000 | 900,000 | 1,000,000 |
Taking the case of an average tanker valued at USD 100 million, the insurance cost has jumped from USD 40,000 to anywhere from USD 0.5 to 1.5 million. In the case of a 15,000 TEU container ship with an asset value of about USD 150 million, the insurance has jumped from USD 80,000 to about USD 1.5 million. In extreme cases for passage through the Strait of Hormuz, some insurance companies have quoted a dissuasive USD 12 million price tag.
Going around the Cape of Good Hope takes longer than via the Suez Canal, adding 10 to 14 days of travel time. In terms of shipping costs, the Cape Route adds about USD one million extra, depending on the size of the ship and sea conditions. Thus, shipping lines reroute via the Cape Route as the extra fuel cost is still cheaper than the insurance premium for war conditions in the Middle East.
As more ships stop by Port Louis, Mauritius enjoys certain spillover benefits arising from port fees, ship chandling, crew change, and ship repairs. It is estimated that the extra benefits added nearly USD 60 to the economy. Being on the path between the Strait of Malacca and the Cape of Good Hope for ships plying the Asia – Europe trade routes, Mauritius is definitely a nice stopover.
