Trump Eyes Insurance to Ease Gulf Oil Prices

As tensions escalate in the Gulf, the White House is considering an unexpected mechanism to keep oil flowing and curb surging gasoline prices: government-backed insurance.

The Strait of Hormuz, a narrow waterway separating Iran and Oman, is one of the world’s most critical energy chokepoints. Approximately 20 million barrels of oil per day and one-fifth of global liquefied natural gas pass through this passage. Even the mere threat of disruption can send energy markets into a tailspin.

The current crisis stems from U.S.-Israeli strikes beginning on 27 February and subsequent Iranian drone and missile attacks across the region. The instability has prompted insurers and shipping companies to reconsider the safety of transiting the strait.

President Donald Trump has suggested using a government-backed insurance programme to lower “war-risk” premiums for vessels navigating the region. By providing a partial backstop for catastrophic losses, the initiative would relieve pressure on private insurers and shipowners.

When risk rises, so do costs. Insurance premiums for ships and cargo spike, shippers levy “war-risk” surcharges, and some vessels delay, reroute, or halt operations. These disruptions can tighten supply and push crude prices higher, even without any change in production levels.

Current Insurance Landscape

Analysts emphasise that insurance is non-negotiable for vessels passing through Hormuz, though it does not remove the risk of attack. “You simply cannot pass through the Strait of Hormuz without insurance, given the high possibility of getting struck by a missile,” said Matt Smith of Kpler. Yet even insured vessels face danger, leaving crews vulnerable.

Major shipping companies are already adjusting operations. Maersk, a bellwether in global freight, announced it would suspend all crossings through the strait until further notice, warning of potential delays to Arabian Gulf ports.

For consumers, the effects may be immediate. Higher shipping costs or slower deliveries could ripple through supply chains, translating into rising fuel prices at American pumps. How sharply motorists feel the impact depends on the duration of the disruption and whether the shipping and insurance markets stabilise.

Until a resolution emerges, the Strait of Hormuz remains the world’s most closely watched energy bottleneck, keeping traders and drivers alike on edge.