President Donald Trump says the US will ensure the free flow of energy through the Persian Gulf with insurance guarantees and even naval guards. But the shipping industry sees it as – at best – only a partial solution to a historic crisis.
“While President Trump’s comments on insurance and tanker escorts led to lower oil prices, we question how much planning has been done on the insurance backstop and think there could be many challenges to quickly implementing the plan,” analysts at RBC Capital Markets LLC said in a note.
US and Israeli attacks on Iran over the weekend have fueled an escalating regional conflict and a series of attacks on ships have now effectively closed the Strait of Hormuz – the key waterway that connects the world’s biggest oil and gas producers to the rest of the world.
Ships are unable or unwilling to transit the strait, producers cannot export, supertanker costs are skyrocketing and many Persian Gulf refineries are quickly filling up. The world’s largest mutual insurer has withdrawn war risk insurance cover for ships in the region.
Read more: Trump orders oil tanker insurance support, says Navy can protect ships in Gulf
“The primary thing that ship owners are thinking about is the actual risk of loss,” said Kirnan Thirupathy, a partner at Kennedy’s Law LLP who specializes in the commodities, shipping and insurance sectors. “Nobody goes into a trade if the risk of loss is too high.”
The effects are intensified. Iraq, the Middle East’s biggest oil producer after Saudi Arabia, has already initiated major production cuts and faces even deeper cuts, a clear sign of pressure on suppliers in the region.
Trump’s solution involves tapping the U.S. International Development Finance Corporation — an agency that typically helps the private sector provide finance for developing countries — which would in turn help charterers, shipowners and major maritime insurers.
There is some international precedent. In November 2023, a facility was established with Lloyd’s insurers and partners with the Government of Ukraine to provide affordable war risk insurance for ships carrying Ukrainian sea exports, particularly grain cargoes. And the DFC has provided some support with war risk reinsurance, which can be reiterated.
Still, an updated U.S. regulatory version to cover oil, gas and fuel in the Persian Gulf would be much larger and more complex given the number of producers and consumers involved. Several shipowners said they would also be wary of tying their fortunes to a volatile US administration.
Read more: Marine insurers cancel war risk cover as Iran conflict escalates
Oil prices rose somewhat on Tuesday after Trump’s announcement, but with limited details, shipowners said they were cautious about both insurance coverage and costs. He asked not to be named because he is not authorized to speak to the media.
Many also said that the issue of trust with the U.S. Navy is not easily resolved given Iran’s continued attacks and limited capacity, especially since many of the tankers are neither U.S.-owned nor U.S.-flagged. He pointed out that Houthi attacks in the Red Sea are also continuing despite the intervention.
“The United States is currently leading the campaign against Iran, and a key question will be whether the two escort ships have sufficient naval assets to continue operations against Iran at the same time,” RBC said in the note.
It will take time to offer even a limited solution to move some traffic – something neither producers nor consumers want.
“It’s welcome news, but clearly it won’t happen overnight,” said Warren Patterson, head of commodities strategy at ING Group NV. “Naval escorts will be helpful, but again, this effort will take time. Naval escorts will be sitting ducks for Iranian strikes.”
Photo: A tanker in the Strait of Hormuz on February 25, 2026. Photo credit: Fadel Senna/AFP/Getty Images
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