To stabilize global energy flows and mitigate maritime security risks, President Donald Trump directed the U.S. Development Finance Corporation (DFC) to provide political risk insurance and financial guarantees for all maritime trade, especially energy cargoes passing through the Strait of Hormuz.
The move, announced via social media, specifically targets the “financial security” of energy cargoes.
President Trump said the DFC would make these guarantees available to all shipping lines at “very reasonable prices,” effectively providing federal support to a region that many private insurers currently view as too volatile.
He added that “the U.S. Navy will begin escorting oil tankers through the Strait of Hormuz as soon as necessary if necessary,” reinforcing his administration’s goal of maintaining uninterrupted global energy supply chains.
Reports show that as conflicts in the Middle East escalate, tanker traffic through the Strait of Hormuz has slowed significantly or stopped.
Strikes and retaliations have added to volatility, while commercial shipping has largely avoided the waterway after Iranian authorities issued radio warnings advising ships not to transit.
Private war risk insurers and the underwriting market have responded to growing threats in the Middle East by withdrawing or significantly repricing transportation coverage in and around the Gulf and Strait of Hormuz.
The resulting insurance vacuum, as shipowners were unwilling to take on uninsured risks, led to an 81% drop in traffic at the height of recent hostilities.
About one-fifth of the world’s oil and gas flows through the Strait of Hormuz. About 200 crude oil and product tankers are currently stranded in the Gulf, according to Lloyd’s List Intelligence.
Reinsurance professionals will be paying close attention to whether the DFC guarantee serves as a first-loss political risk layer or as a broader systemic stabilization mechanism for global trade finance.
If widely adopted by shipping lines, the initiative could reduce demand pressure on private war risk insurance pools while also helping to create a new framework for public-private catastrophe risk sharing.
However, once threats to shipping, energy assets and other exposed infrastructure become more certain, this development is likely to serve primarily as a stop-gap measure until private insurance and reinsurance markets regain confidence.
Several analysts, including Moody’s, said the near-term impact on Gulf insurers should remain limited under a baseline scenario in which the conflict is relatively brief.
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