Trump says US will escort, insure oil tankers amid the Iran war

PRESIDENT Donald Trump said the US will provide insurance guarantees and naval escorts to ensure safe passage for oil tankers and other vessels through the Strait of Hormuz, intending to head off a potential energy crisis caused by the war with Iran.

- JENNIFER A. DLOUHY, BEN BARTENSTEIN & ARI NATTER

Trump said Tuesday that the US International Development Finance Corporation would offer insurance “at a very reasonable price” to help ensure the flow of energy and other commercial trade in the Gulf. In addition, he said “if necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz, as soon as possible.”

“No matter what, the United States will ensure the FREE FLOW of ENERGY to the WORLD,’ the president posted on social media.

Oil prices pared gains briefly on the news, with global benchmark Brent trading near $80 a barrel after settlement. While the president's announcement knocked out some of the risk premium in energy markets, traders remain skeptical that the plan will allow oil flows to swiftly return to normal levels in the region.

Prices have surged more than 10% since the US and Israel began attacks on Iran over the weekend, triggering widespread disruptions in the Middle East and effectively halting oil flows in the critical Strait of Hormuz, through which a fifth of the world’s energy supplies transit.

Trump’s post did not elaborate on the insurance mechanism to be offered by the DFC, an institution that generally exists to mobilize private capital to developing nations and lower risks for investments in poor countries.