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US ship insurance not enough for Hormuz: Sources

US ship insurance not enough for Hormuz: Sources

New York, 4 March (Argus) — A US proposal to offer political-risk insurance is unlikely to meaningfully increase traffic through the strait of Hormuz in the near term because Iranian threats to the strait remain, market participants told Argus . The US' ability to provide naval escorts in the short term is also unlikely as its navy will lack escort capacity until at least the initial stage of the military operation is over. "It should be noted that simple physical security may not be enough to induce a return of commercial traffic," said Center for Naval Analyses naval analyst Joshua Tallis. Tallis pointed to the asymmetric nature of Iranian military capability, including sea and airborne drones and naval mines, that would pose a threat to shipping even if conventional Iranian naval forces are out the of the picture. "Insurance doesn't make the hull impervious to rockets," shipbroker Odin head petroleum and tanker analyst Alpman Ilker told Argus . "Insurance may incentivize a few to start transiting but the Iranians will likely attack and then traffic will again cease transit." US president Donald Trump ordered the US' Development Finance corporation to offer political risk insurance to ships transporting energy and other commodities through the Mideast Gulf on 3 March, although it wasn't immediately clear how the agency will implement this order . The move came after major re-insurers announced the cancellation of war-risk coverage throughout the Middle East to go into effect from 5 March. Naval escorts would help reduce the threat of attacks, but providing protection for all tankers operating in areas currently threatened by Iran is unrealistic as this would require a very high number of warships and other military assets, according to shipping association BIMCO. "Transiting this region is ultimately a decision for the ship operator because even with naval escorts, there is still significant risk involved," Sean Kline, president of the Chamber of Shipping of America told Argus . "Given the nature of the war, risks remain high in the strait as long as Iran keeps threatening ships," Noam Raydan, senior fellow at the Washington Institute told Argus . By Charlotte Bawol Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.