The US wants to unblock the Strait of Hormuz and release oil. They allocated $20 billion for this.
The launches will be insured by the American International Development Finance Corporation (DFC). “Insurance is not the main problem right now,” says the analyst.
Oil prices rose sharply on Friday as tanker traffic in the Persian Gulf remains suspended due to the war with Iran.
Analysts say until the security situation improves, tankers are unlikely to start passing through the Strait of Hormuz again.
Donald Trump's administration announced a reinsurance program worth $20 billion on Friday. for tankers and other maritime transport vessels to enable ships to pass through the strait.
Tanker traffic in the Persian Gulf remains paralyzed due to the war with Iran. Some Gulf countries have begun to cut production because they cannot export oil through the Strait.
The US International Development Finance Corporation (DFC) will insure losses up to USD 20 billion.
DFC and the Treasury Department said they are working closely with U.S. Central Command to implement the plan.
“We are confident that our reinsurance plan will enable crude oil, gasoline, LNG, jet fuel and fertilizers to flow through the Strait of Hormuz and be transported again around the world,” DFC CEO Ben Black said in a statement.
The strait is the most important oil transshipment point in the world, and about 20 percent world consumption is exported through this narrow waterway. About 20 percent world exports of liquefied natural gas also pass through the strait.
President Donald Trump said Tuesday that the United States would offer insurance to merchant ships in the Persian Gulf and a U.S. Navy escort if needed. Several tankers have fallen victim to attacks since the US and Israel carried out a massive wave of airstrikes on Iran last weekend.
Insurance isn't a major concern for shipowners right now, said Matt Wright, senior freight analyst at consulting firm Kpler. Tankers do not transit the Strait because they fear for their physical safety.
“We need to be sure that Iran's ability to continue the war has diminished,” Wright said.
DFC is a U.S. federal agency that supports private investment in developing countries and pursues foreign policy goals.
Source: CNBC
