President Donald Trump has declared that the United States will guarantee the free flow of energy through the Persian Gulf — insured, escorted, protected. It was the kind of assurance designed for markets, not for minefields. Oil prices briefly retreated. The shipping industry, however, was less convinced. Announcing a shield is one thing. Engineering it amid live fire is another.
American and Israeli strikes on Iran have propelled the region into a new and volatile phase. Multiple attacks on vessels have effectively paralysed traffic through the Strait of Hormuz — that narrow maritime artery through which a fifth of global oil and vast volumes of gas must pass. When ships cannot sail, producers cannot export. And when exports stall, the illusion of market liquidity evaporates. Supertanker freight rates have surged. Storage capacity in several Gulf refineries is rapidly filling. Major mutual insurers have withdrawn war-risk cover in the region. For shipowners, the issue is not politics but probability. Iraq, the region’s second-largest producer after Saudi Arabia, has already begun cutting output. Further reductions are expected. The strain is no longer theoretical.
Trump’s proposed remedy involves the US International Development Finance Corporation — an institution typically tasked with supporting private investment in emerging economies — stepping in to underpin charterers, shipowners and marine insurers. There is precedent: in 2023, a war-risk insurance mechanism supported Ukrainian grain exports, backed by Lloyd’s and sovereign guarantees. The DFC provided reinsurance then. It could do so again. Yet replicating such a model for the entire Gulf energy complex would be exponentially more complex. The scale is larger. The exposure is deeper. The political risks are more volatile. And not all shipowners are eager to tether their commercial survival to the continuity of a polarised American administration.
Several operators, speaking privately, expressed scepticism not merely about insurance mechanics but about naval capacity. Escorting tankers requires sustained maritime assets. The United States is simultaneously conducting offensive operations. Iranian retaliation continues. Many tankers are neither US-owned nor US-flagged. Convoys may reassure traders; they also create concentrated targets. Whether sufficient naval resources exist to both prosecute military operations against Iran and protect commercial traffic. History suggests that such dual missions are rarely frictionless. Even if a partial corridor were implemented, it would not be immediate. Producers need days. Markets react in minutes.
The announcement may have temporarily steadied oil prices, but the structural uncertainty remains. Insurance cannot erase geopolitics. It can only price it. The Strait of Hormuz has long been described as a chokepoint. It has now become a stress test — not merely for energy markets, but for the credibility of American security assurances in an era where strategy is announced in real time and implemented under fire. In financial markets, liquidity is assumed until it disappears. In geopolitics, stability is assumed until it is challenged. Trump has promised safe passage. The sea, however, does not trade on promises.