Insurance + protection: Trump orders safeguarding maritime trade in the Gulf region, crude oil narrows gains during trading.

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U.S. President Trump announced a dual approach to address the energy supply crisis triggered by the U.S. military strike on Iran, promising to provide political risk insurance for commercial vessels passing through the Gulf region and, if necessary, to deploy the navy to escort oil tankers through the Strait of Hormuz.

On Tuesday, the 3rd, during U.S. market midday hours, Trump posted on his social media platform, stating he had instructed the U.S. International Development Finance Corporation (DFC) to provide political risk insurance and financial security guarantees "at very reasonable prices" for "all maritime trade passing through the Gulf, especially energy trade," focusing on energy transactions.

Trump said these guarantees would be open to all shipping companies, “all shipping companies can obtain this insurance.”

Trump also stated, “If necessary, the U.S. Navy will start escorting oil tankers through the Strait of Hormuz as soon as possible,” saying "in any case, the United States will ensure the free flow of energy to the world," and boasted that the U.S. has the strongest economic and military power, adding “more actions are coming.”

After Trump’s announcement during midday trading in the U.S., the rise in U.S. crude oil prices immediately narrowed. However, market participants remain cautious about whether these measures can restore normal oil flow in the Strait of Hormuz in the short term.

During European trading, WTI crude oil futures surged toward $78/barrel, rising almost 9.5% intra-day, then once fell back to $71.70, with intra-day gains less than 0.7%. On Tuesday European trading, the global benchmark Brent crude, which had risen close to 9.5%, dropped to $78.54, up 1% compared to Monday’s close.

War Hits Maritime Arteries, Crude Oil Surges Over 10% in Two Days

Since the U.S. and Israel launched military strikes on Iran on Saturday, February 28, the Middle East has plunged into widespread turmoil, and oil transportation through the Strait of Hormuz has essentially come to a halt. This strait is known as the world’s “energy chokepoint,” responsible for about one-fifth of the world’s energy supply transport.

Since the U.S. and Israel attacked Iran, international crude oil futures have seen sharp increases on both Monday and Tuesday this week. On Monday, intra-day gains exceeded 10%, Tuesday saw nearly 9.5% gains. By the close on Tuesday, U.S. oil and Brent oil had risen over 14% and 12% respectively in the last two days.

Several of the world’s largest maritime insurance mutuals have withdrawn war risk coverage for ships entering the Persian Gulf. Some ship owners can obtain substitute coverage from other insurers, but premiums have soared sharply.

Media reports say sources revealed that Trump’s announcement of these guarantees was partly in response to concerns that a deteriorating insurance market would push up oil prices.

Iran Warns Ships Not to Transit "Wartime" Strait of Hormuz

Iranian media reported that the Islamic Revolutionary Guard Corps issued a statement saying the Strait of Hormuz is in a wartime state, and ships passing through “may face risks from missiles or uncontrolled drones.”

The statement said international shipping companies have been warned not to transit this passage. “The Strait of Hormuz is entirely under the surveillance and control of the Iranian Islamic Republic Navy.” The statement added that more than ten oil tankers have been attacked by Iran after ignoring warnings.

According to CCTV News, late at night on March 2nd local time, an advisor to the Islamic Revolutionary Guard Corps commander stated that the Strait of Hormuz has been closed, and Iran will strike all vessels attempting to transit the strait.

Insurance Mechanisms Still Unclear, Implementation May Lag

Trump did not specify the operational mechanism by which the U.S. International Development Finance Corporation (DFC) would provide insurance. The institution’s usual role is to mobilize private capital for developing countries and reduce investment risks in poorer nations, which differs significantly from directly underwriting maritime war risks for commercial shipping.

Bob McNally, president of consulting firm Rapidan Energy Group and former White House official, said the announcement may help boost market confidence; however, both the escort and insurance mechanisms will require some time for implementation. “The U.S. military first needs to suppress Iran’s mine-laying capabilities and its ability to use anti-ship cruise missiles and drones to attack vessels.”

Bob McNally wrote in an email: “Assuming Iran’s government decides to continue resisting, even with the insurance and escort programs announced, it would take weeks—not hours or days—for oil flows through the Strait of Hormuz to fully recover.”

Rising Oil Prices Create Political Pressure, White House Coordinates Response

The rise in energy prices has created political pressure for the Trump administration. U.S. domestic retail gasoline prices have reached nearly five-month highs, which presents a potential political risk with the November midterm elections approaching this year.

Secretary of State Rubio said earlier this week that the Trump administration had anticipated the rise in energy prices, and Treasury Secretary Bessent and Energy Secretary Wright would jointly launch a relief plan. Trump is expected to meet with Bessent and Wright at the White House on Tuesday regarding this issue.

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