March 07, 2026 – The White House is turning to an unlikely weapon to stabilise global energy markets. Specifically, the U.S. International Development Finance Corporation will provide up to $20 billion in reinsurance for vessels transiting the Persian Gulf. As a result, Washington now shoulders the risk that private insurers refuse to carry.
Why Private Insurers Walked Away
The decision comes after major marine insurers suspended coverage for the Gulf entirely. For instance, NorthStandard, the London P&I Club, and the American Club all pulled out in recent days. Consequently, this insurance vacuum led to an 81% decline in Strait of Hormuz transits. In addition, roughly 200 tankers remain stranded, according to Lloyd’s List Intelligence.
Furthermore, JPMorgan analysts estimate the true coverage gap at approximately $352 billion. Therefore, the DFC’s $20 billion facility addresses only a fraction of that shortfall. However, it signals a clear willingness on the part of the government to absorb wartime maritime risk.
What’s at Stake for Global Energy
The stakes extend far beyond shipping lanes. Indeed, about 20% of global oil and gas flows through the Strait of Hormuz. Meanwhile, Brent crude is headed for its best weekly gain since 2020. As a consequence, Asian economies face outsized vulnerability to prolonged disruption.
In response, President Trump also pledged U.S. Navy escorts for tankers. This strategy echoes the “Tanker Wars” of the late 1980s. Above all, it aims to prevent energy supply shocks from spiraling into a global recession.
Can the DFC Deliver at Scale?
Despite the bold commitment, skeptics remain. For example, RBC Capital Markets questioned the plan’s execution speed. Moreover, the DFC’s statutory risk exposure stood at $205 billion as of late 2025. As a result, a large-scale Gulf commitment could significantly strain that capacity.
Historically, the agency’s primary insurance role involved debt-for-nature swaps. Now, however, it must underwrite war-risk exposure for hundreds of tankers. For the time being, the facility covers hull, machinery, and cargo losses. Ultimately, markets will watch closely as the first policies are tested.
