The Donald Trump administration announced on Wednesday that the US would offer insurance for all vessels travelling in the Gulf for trade purposes.
According to the new order effective immediately, the United States Development Finance Corporation (DFC) has been tasked with providing "political risk insurance and guarantees for the Financial Security of ALL Maritime Trade", Trump said in a Truth Social post.
The DFC is the international investment arm of the US government that partners with the private sector to advance US foreign policy and strengthen the country's national security by mobilising private capital around the world.
This discounted risk insurance comes after Iran closed the Hormuz Strait amid its conflict with the US and Israel, that has spilt over into the wider Middle East.
This strait is a crucial passageway for about a quarter of the world's crude oil, connecting oil producers in the Gulf of Hormuz—such as Saudi Arabia, Iran, and the United Arab Emirates—with the Gulf of Oman and the Arabian Sea.
Its closure on Monday had an immediate impact on the financial markets, causing a surge in oil prices.
"This will be available to all Shipping Lines," he added in the post, noting that if the need arose, the US was also ready to use naval resources to escort tankers in the Gulf, especially "through the Strait of Hormuz".
"DFC's Political Risk Insurance and Guaranty products will help ensure commerce, capital, and energy can operate at capacity during the ongoing conflict," CEO Ben Black said about the risk insurance.
However, it is yet to be seen whether this move can allay shipping companies' fears on transiting through not just a volatile region marked by airstrikes and naval buildup, but also a blocked Hormuz Strait.
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