In an intervention aimed at stabilising global energy flows and easing maritime security risks, President Donald Trump has directed the United States Development Finance Corporation (DFC) to extend political risk insurance and financial guarantees for all maritime trade, particularly energy cargoes transiting the Strait of Hormuz.
The move, announced via social media, specifically targets the “financial security” of energy cargoes.
President Trump stated that the DFC would offer these guarantees at a “very reasonable price” to all shipping lines, effectively creating a federal backstop for a region currently deemed too volatile by many private insurers.
He added that, “if necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz as soon as possible,” reinforcing his government’s objective of maintaining an uninterrupted global energy supply chain.
Reports indicate that tanker transits through the Strait of Hormuz have largely slowed or halted following the escalation of conflict in the Middle East.
Strikes and retaliatory actions have increased volatility, while commercial shipping has largely avoided the waterway after Iranian authorities issued radio warnings advising vessels not to transit.
Private war-risk insurers and underwriting markets have responded to growing threats in the Middle East by withdrawing or significantly repricing coverage for traffic in and around the Gulf and the Strait of Hormuz.
The resulting insurance vacuum contributed to an 81% collapse in transits at the height of recent hostilities, as ship owners became reluctant to assume uninsured exposure.
Approximately a fifth of the world’s oil and gas flows through the Strait of Hormuz. According to Lloyd’s List Intelligence, around 200 crude oil and product tankers are currently stranded in the Gulf.
Reinsurance professionals will be closely monitoring whether the DFC guarantees function as a first-loss political risk layer or as a broader systemic stabilisation 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 new frameworks for public–private catastrophe risk sharing.
However, the development is likely to serve primarily as a stopgap measure until private insurance and reinsurance markets regain confidence, once there is greater certainty around threats to shipping, energy assets, and other exposed infrastructure.
According to a range of analysts, including Moody’s, the near-term impact on Gulf insurers should remain limited under a baseline scenario in which the conflict remains relatively short-lived.
