U.S. Set To Launch Insurance Program To Revive Shipping Through Strait Of Hormuz
The United States is preparing to start a new insurance programme for ships moving through the Strait of Hormuz, as tanker traffic remains low due to the ongoing Iran conflict.
The route handles nearly 20% of global oil and gas flows, making it one of the most important shipping lanes in the world.
The programme is expected to begin soon and is aimed at encouraging vessels to return to the region.
US Treasury Secretary Scott Bessent said the plan will provide insurance guarantees along with naval support to help ships pass safely through the strait.
The programme was first announced on March 3 and will be carried out through the US International Development Finance Corporation, with support from United States Central Command.
Bessent said the oil market is currently well supplied and added that steps have already been taken to make oil stuck at sea available to global buyers. He also said the new maritime reinsurance programme is expected to give shipowners more confidence while operating in the Gulf region.
So far, there is no clear evidence that any ships have used this programme, and commercial vessels have mostly avoided the strait since the conflict began on February 28. Although US President Donald Trump said that Iran allowed 10 tankers to pass through, overall traffic remains limited.
Insurance for ships is still available in the market, including from Lloyd’s of London, but the cost has increased sharply. This suggests that the main concern for shipowners is not insurance, but the risk of attacks.
Iran has warned it could close the strait completely and target energy infrastructure if tensions increase further. Some attacks have already damaged refining and gas processing facilities in the region, affecting supply.
Bessent said tanker movement in the Gulf is starting to increase slowly and expects it to rise further in the coming days. He added that traffic is already higher than previous days and could continue to grow even before the strait is fully secured.
The US government has taken steps such as releasing oil from emergency reserves and easing some shipping restrictions to help manage supply. Other options are also being considered, including suspending the federal fuel tax, which would require approval from lawmakers.
Trump also mentioned the possibility of taking control of Iran’s oil, without giving details. This could include action related to key export locations such as Kharg Island.
Bessent said the US economy is in a position to handle short-term disruptions due to increased domestic oil and gas production. He also said that people may accept higher prices for some time if it leads to more stable conditions in the long run.
The situation in the Strait of Hormuz remains uncertain, and shipping companies are likely to stay cautious until risks in the region reduce.
References: Bloomberg, Moneycontrol
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