One day after marine insurance underwriters pulled war-risk coverage from the Persian Gulf, President Trump moved to fill the gap himself. In a Truth Social post on Monday, he ordered the U.S. Development Finance Corporation to offer political risk insurance for all shipping through the strait and said the Navy would escort tankers "as soon as possible."
The twin announcements amount to Washington's clearest attempt yet to restart the flow of crude through the 100-mile chokepoint between Iran and Oman. Tanker traffic through Hormuz has dropped roughly 70% since U.S.-Israeli strikes hit Iranian targets on February 28, and the disruption has already pushed gas prices up 11 cents overnight to a national average of $3.11 per gallon.
Federal backstop for war-risk insurance
The DFC, originally created to finance development projects abroad and compete with Chinese state lending, will now underwrite maritime risk at a scale it has never attempted. CEO Ben Black said the agency is ready to support "commercial shipping charterers, shipowners, and key maritime insurance providers" and invited interested parties to contact [email protected].
Trump described the coverage as available "at a very reasonable price" for all shipping lanes, though the White House gave no details on premium rates, coverage limits, or how quickly policies would be issued. Private underwriters had already withdrawn war-risk coverage the day before, leaving tanker owners unable to secure the insurance needed to transit the Gulf.
Navy told shippers it lacked escort capacity
The escort pledge, however, ran into an immediate credibility problem. Just hours before Trump's post, Navy officials told tanker executives there was "no availability" for an escort mission, according to industry officials briefed on the call.
Nine guided-missile destroyers and three littoral combat ships are currently deployed to the Arabian Sea and Bahrain. Roughly one-third of the entire deployed U.S. fleet is already stationed in the Middle East. Bryan Clark, a retired submariner at the Hudson Institute, told Breaking Defense that any escort operation would need to be paired with a sustained air campaign to neutralize Iranian missile launchers along the coast.
Destroyers including USS Gravely, USS Laboon, USS Mason, and USS Thomas Hudner are in the region, but escorting dozens of tankers per day across a 1,000-nautical-mile risk zone stretching from Kuwait to Duqm would stretch those assets thin.
Iran doubles down on Hormuz threats
Tehran responded with defiance. Ebrahim Jabari, a senior Revolutionary Guard adviser, declared that the strait is closed and warned that IRGC and Iranian navy forces would "set ships on fire" if anyone attempted to cross.
Iran's electronic warfare operations and explosives attacks have already complicated navigation for the handful of vessels still attempting the transit. The combination of military threats and vanished insurance coverage has effectively shut down the world's most important oil chokepoint.
Market reaction
Brent crude traded at $81.20 per barrel on Tuesday, while WTI held at $74.57. Oil prices have climbed about 15% since strikes began on February 28. Bob McNally, president of Rapidan Energy Group, cautioned that the announcement alone would not fix the problem. Full restoration of tanker traffic, he said, would take "weeks, not days" to implement.
About 21 million barrels of oil per day transited Hormuz in 2022, making it the single most critical bottleneck in global energy supply. Until ships can actually secure insurance and safe passage, prices are likely to remain elevated.