U.S. Government Steps In to Insure Ships in Persian Gulf Amid Escalating Tensions

President Donald Trump has announced that a U.S. government agency will step in to insure ships sailing through the Persian Gulf, aiming to maintain the "free flow of energy" amid escalating tensions and the ongoing Iran war.

The administration has tapped the U.S. International Development Finance Corporation (DFC), which typically focuses on economic growth in developing countries, to provide political risk insurance to "all shipping lines." The DFC also stated it is ready to mobilize its political risk insurance and guaranty products to stabilize international commerce and support American and allied businesses operating in the Middle East.

This decision comes as global insurers such as NorthStandard, the London P&I Club, and the American Club have suspended coverage for ships traveling through Iranian waters due to escalating risks. Disruptions to oil shipments are already driving up prices at the gas pump.

The DFC's primary use of political risk insurance has historically been for "debt-for-nature swaps," where it backs a country's external debt in exchange for nature conservation projects. However, its current role represents a departure from this focus to address immediate geopolitical risks affecting global oil supplies.

Treasury Secretary Scott Bessent confirmed that the DFC has been preparing contingency plans and will reach out to ship owners and insurance brokers over the coming days. The move is seen as an effort to stabilize oil markets amid rising prices, which have jumped 11% this week due to fears of prolonged disruptions in regional oil supplies.

The White House did not specify whether the insurance will extend solely to U.S.-flagged ships or include vessels flying under other countries' flags. Some lawmakers have raised concerns about potential subsidies for oil shipments to China, highlighting the broader geopolitical implications of this policy shift.