Donald Trump's proposal for US-backed insurance and naval escorts through the Strait of Hormuz has done little to curb soaring maritime insurance premiums. Underwriters are reassessing risks to oil, gas, and cargo vessels following increased tensions.
Trump announced on Truth Social that the U.S. would offer cover "at a very reasonable price" for maritime trade, particularly energy shipments, through the Gulf. He also suggested providing naval escorts for safe passage, vital for a route carrying 20% of the world's oil supply.
However, experts at Lloyd's of London expressed uncertainty regarding the plan's details. They noted that naval escorts could potentially escalate risks. The Joint War Committee of the Lloyds Markets Association has expanded its high-risk designation to cover the entire Persian Gulf.
Neil Roberts, secretary of the JWC, stated that the market is functioning and intervention may not be necessary, cautioning that U.S. escorts could become targets. Premiums are expected to rise to reflect heightened risks, with reports suggesting significant increases.
The situation has led to scores of vessels waiting at anchor, causing oil and gas prices to spike, alongside shipping costs. While the immediate economic impact is concentrated in commodity markets, a prolonged disruption could lead to broader trade impacts and shortages.