File- Shipping traffic in Strait of Hormuz on 28 Feb. Crude Oil prices started falling after Trump made the announcement
President Trump said the U.S. will “immediately” offer “political risk insurance and guarantees” for energy tankers and other ships in the Gulf region, and that the Navy will escort tankers through the Strait of Hormuz if needed.
Why it matters: The White House is trying to ease oil price spikes that are starting to boost U.S. gasoline prices. Oil prices retreated Tuesday as word of the plans began to emerge.
- His statement on Truth Social comes as tankers are avoiding the Strait of Hormuz, the narrow waterway abutting Iran that handles a whopping one-fourth or so of the world’s maritime oil trade, and huge amounts of liquefied natural gas, too.
Trump said the financial assurances would be offered through the U.S. Development Finance Corp. at a “very reasonable price.”
- “If necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz, as soon as possible,” he wrote.
- “No matter what, the United States will ensure the FREE FLOW of ENERGY to the WORLD.”
TPH & Co., in a note earlier Tuesday, said “skyrocketing shipping (new all-time highs) and insurance rates” are a key reason why traffic through the Strait of Hormuz has largely ground to a halt.
In addition to soaring rates, reported cancellations of some coverage has vastly cut transit through the vital oil choke points.
- It’s among the reasons why the conflict is pushing up crude oil and other energy commodity prices, which is already filtering down to U.S. gasoline pumps.
- The nationwide average price for regular gasoline is $3.11 per gallon, an 11-cent increase over yesterday, per AAA.
- Rising gasoline prices — alongside rising electricity costs — are a political risk for Republicans ahead of the midterm elections.
- The White House hasn’t provided details of the new plans.
- But they already could be affecting oil prices. The global benchmark Brent crude retreated back to slightly over $80 per barrel Tuesday afternoon after hitting $85 for the first time since 2024 earlier in the day.
- But prices remain elevated since the conflict began — up around 10% from where they closed last Friday.
- During the 1987–1988 “Tanker War” phase of the Iran-Iraq War, the U.S. Navy conducted Operation Earnest Will, the largest naval convoy operation since World War II. U.S. warships escorted re-flagged Kuwaiti tankers through the Persian Gulf to protect them from Iranian attacks, ensuring the free flow of oil.
Axios
