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Donald Trump’s offer of US-backed insurance and naval escorts for shipping travelling through the Strait of Hormuz has not prevented maritime premiums soaring as underwriters scramble to reassess the risks to oil, gas and cargo vessels.
With the Strait of Hormuz effectively closed to shipping following the US attack on Iran, on Tuesday the president wrote on Truth Social that the US would provide cover “at a very reasonable price… for the Financial Security of ALL Maritime Trade, especially energy, traveling through the Gulf”.
He also suggested that naval escorts could be used to provide safe passage for tankers in the Persian Gulf, the route to market for 20% of the world’s oil supply.
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Experts at Lloyd’s of London, the world’s oldest insurance market, told Sky News that the president’s proposal was unclear, and that naval escorts could even increase the risk to shipping.
On Tuesday, the Joint War Committee (JWC) of the Lloyds Markets Association, which represents participants in the Lloyds market, expanded its “high-risk” area in the Middle East to cover the entire Persian Gulf.
Underwriters had already begun cancelling or repricing war-risk insurance for vessels in the region, but Neil Roberts, secretary of the JWC, told Sky News the market was working and that the American intervention was unnecessary.
“I don’t think the details of such a scheme have been given to anyone, so far as we know, and it will take time to work it out, and the appetite is unknown,” he said.
“Essentially our market is still writing risks and there isn’t a perception here that there’s a need for intervention at this time.”
Lloyd’s of London
Mr Roberts said that premiums would rise to reflect the heightened risk…
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