The U.S. government’s proposal to provide insurance support for vessels transiting the Strait of Hormuz may not be sufficient to quickly restore commercial shipping through the crucial energy corridor, according to industry participants.
The plan aims to offer government-backed war-risk insurance to shipowners willing to resume voyages through the Gulf, following a sharp withdrawal or tightening of coverage by commercial insurers amid escalating regional tensions involving Iran. The proposal is intended to reduce financial risks for vessels carrying crude oil, LNG, and other cargo through the strategic passage.
However, shipping companies and marine insurers say insurance support alone may not address the broader security concerns facing crews and vessels. Recent attacks on shipping and heightened military activity in the region have led many shipowners to suspend or reroute services rather than risk operating in the area.
Market sources note that war-risk premiums for Gulf voyages have surged significantly in recent weeks, while some underwriters have shifted to single-voyage coverage or withdrawn altogether. Even with a government backstop, operators remain wary of potential damage to vessels, threats to crew safety, and operational disruptions.
The Strait of Hormuz handles roughly a fifth of global oil and LNG shipments, making it one of the world’s most critical maritime chokepoints. Prolonged disruptions to navigation through the passage could have significant implications for global energy markets and supply chains.
Industry observers say a sustained improvement in regional security conditions, alongside insurance support measures, will likely be required before commercial shipping resumes normal operations through the waterway.
