Trump Readies US Naval Protection, Orders Insurance for Ships in Middle East Gulf

President Donald Trump has announced the U.S. International Development Finance Corporation will provide political risk insurance and financial guarantees for vessels passing through the Strait of Hormuz at a “very reasonable price”, in a post to social media on Wednesday.

Shipowners have begun seeking alternative routes or halting vessels amid U.S.-Israeli military strikes on Iran, which has prevented oil and natural gas cargoes from reaching export markets, in turn spurring oil prices higher amid fears of supply shortages.

The announcement by the U.S. President was a move to encourage commercial shipowners to resume operations amid security concerns in the region that have resulted in the de facto closure of the Strait of Hormuz, the narrow waterway between Iran, the United Arab Emirates and Oman that connects the Middle East Gulf to the Gulf of Oman and the open ocean.

“If necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz, as soon as possible,” said Trump in the post.

“No mater what, the U.S will ensure the free flow of energy to the world,” he added.

A significant number of vessels carrying crude oil, refined petroleum products and liquefied natural gas (LNG) from refineries in the Middle East are stranded west of the Strait as maritime insurance companies cancel war risk premiums.

“Naval escorts would help reduce the threat for the ships being protected,” said Jakob Larsen, chief safety and security officer at the Baltic and International Maritime Council (BIMCO). “That said, providing protection for all tankers operating in areas currently threatened by Iran is unrealistic as this would require a very high number of warships and other military assets.”

Commercial shipping companies including Maersk, Hapag-Lloyd, Mediterranean Shipping Company (MSC) and CMA CGM have suspended all vessels from transiting through the Strait of Hormuz and the Middle East Gulf region until further notice amid the escalating conflict.

Shippers have imposed war risk surcharges on cargoes loading in the Middle East in response to the escalating tensions in the region, passing the cost on to their customers.

Reporting by Stacy Maphula, smaphula@opisnet.com; Editing by Yazdi Merchant, ymerchant@opisnet.com