Trump Announces Insurance for Maritime Oil Transport, Navy Will Escort When Needed

President Donald Trump acknowledged on Tuesday that the U.S.-led war against Iran is disrupting global energy markets and causing oil and gas prices to rise. Speaking with German Chancellor Friedrich Merz, Trump stated he expects prices to fall once the conflict ends, potentially lower than before. The Strait of Hormuz, through which approximately 20 million barrels of crude oil pass each day, is effectively closed due to the conflict, blocking shipping for countries including Iran, Iraq, Kuwait, and the United Arab Emirates.

Trump announced new measures, including political risk insurance for shipping lines and the potential use of U.S. Navy ships to escort tankers through the region. Gasoline prices have already risen by 10 cents a gallon overnight, with further risks to prices at the pump expected. The administration's measures aim to stabilize energy markets and ensure the free flow of oil and gas.

The administration is also considering using the Strategic Petroleum Reserve to further stabilize the market, though this has not yet been confirmed. This move represents a strong effort by the administration to address rising energy prices and calm oil markets amid escalating Middle East tensions.

Why Did This Happen?

The administration's decision to provide political risk insurance and potential naval escorts comes as a response to the economic impact of the conflict on American consumers and global energy markets. Trump emphasized the administration's commitment to ensuring the free flow of energy and noted that the U.S. Navy could begin escorting oil tankers through the Strait of Hormuz if necessary.

The Strait of Hormuz, a critical waterway for global oil shipments, has experienced disruptions from recent fighting. Trump highlighted that Americans may need to accept higher prices temporarily, but he expects a significant drop once the conflict ends.

How Did Markets React?

The Strait of Hormuz, a critical energy chokepoint, has effectively become a no-go zone due to security risks, leading to fears of a supply shock in energy markets. This disruption threatens oil and LNG flows with significant global economic implications. Commercial vessel traffic through the Strait of Hormuz has effectively ground to a halt following rapidly escalating conflict in the region.

Ocean carriers Maersk, MSC, Hapag-Lloyd, and CMA CGM have each issued advisories warning of disruption to shipments after Iran launched a series of attacks on vessels in the Strait of Hormuz and the Gulf of Oman. The strait typically carries around 20 million barrels of oil per day, or nearly a third of all seaborne crude flows.

What Are Analysts Watching Next?

The dominant transmission channel for market impacts is energy flows, not geopolitical escalation itself. Oil prices have surged, and shipping through the Strait of Hormuz has stalled, with markets pricing in an energy risk premium. The duration of elevated energy prices will determine macroeconomic impacts and EM differentiation.

If elevated oil prices persist, differentiation across EM becomes more pronounced. Oil exporters benefit, while energy-importing sovereigns face pressure through weaker trade balances, inflation pass-through, and wider sovereign bond spreads. A sustained period of high energy prices would materially alter the global macroeconomic outlook, feeding into inflation expectations, central-bank policy re-pricing, and broader financial conditions.

Escalating hostilities in the Gulf are testing global insurance markets, particularly marine, aviation, and political violence coverage. Insurers are issuing cancellation notices and raising premiums, increasing underwriting volatility and credit risk. War-risk underwriters have issued seven-day cancellation notices for ships transiting the Gulf and are preparing sharp premium increases.

Specialist war-risk markets may benefit from higher pricing in the short term, but increased accumulation in a narrow corridor is raising the downside. Reinsurers are likely to respond by lifting attachment points, tightening event definitions, and cutting capacity, leaving primary carriers with higher net retentions.