US DFC To Reinsure Oil Vessels In Gulf In $20 Billion Plan Amid Middle East War Disruption

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The revolving insurance offering will apply only to vessels that meet the criteria. Insurance will focus on Hull & Machinery and Cargo to start, DFC said.

  • DFC’s detailed implementation plan was approved by President Donald Trump. 
  • The plan will restore confidence in maritime trade, help stabilize international commerce, and support American and allied businesses operating in the Middle East during the conflict with Iran, the DFC statement said.
  • The blockade of Strait of Hormuz has led to sharp increase in oil and gasoline prices. U.S. oil futures rallied above $90 per barrel for the first time on Friday, since Oct. 2023. 

The U.S. International Development Finance Corporation (DFC) on Friday announced a $20 billion plan for maritime reinsurance in the Gulf region. 

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DFC’s detailed implementation plan was approved by President Donald Trump to deploy maritime reinsurance, including war risk, in the Gulf region. 

 “Working alongside CENTCOM, DFC coverage will offer a level of security no other policy can provide. We are confident that our reinsurance plan will get oil, gasoline, LNG, jet fuel, and fertilizer through the Strait of Hormuz and flowing again to the world,” said DFC CEO Ben Black.

Details

The DFC reinsurance facility will insure losses up to approximately $20 billion on a rolling basis. The revolving insurance offering will apply only to vessels that meet the criteria. Insurance will focus on hull, machinery and cargo to start, DFC said. 

In close coordination with the United States Central Command (CENTCOM), this plan will restore confidence in maritime trade, help stabilize international commerce, and support American and allied businesses operating in the Middle East during the conflict with Iran, the statement said. 

The DFC, established in 2019 with bipartisan support under President Trump, is the international investment arm of the U.S. Government.

Oil Supply Uppended

Global oil supply has been in shock after the U.S. and Israel launched coordinated attacks on Iran and killed its supreme leader. The war has led to Iran blocking the critical oil shipping route of Strait of Hormuz which caters to 20% of the global oil supply. 

The blockade has led to sharp increases in oil and gasoline prices. U.S. oil futures rallied above $90 per barrel for the first time on Friday, since Oct. 2023. 

Meanwhile, U.S. equities continued their downturn on Friday. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down 1.04%, the Invesco QQQ Trust ETF (QQQ) fell 0.9%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) slumped 1.14%. 

The United States Oil Fund (USO), which tracks the daily price movements of West Texas Intermediate (WTI) light, sweet crude oil, was up 13%. ProShares Ultra Bloomberg Natural Gas (BOIL), a leveraged ETF that invests in futures and swap contracts, was up 12%. 

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