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Reportedly, Trump intends to clear passage in the Strait of Hormuz in part by using the US International Development Finance Corporation (DFC) to provide insurance for ships that sail through there.

US and Israeli strikes on Iran over the weekend have triggered a spiraling regional conflict and multiple attacks on vessels have now effectively closed off the Strait of Hormuz. [...]

Trump’s solution involves tapping the US International Development Finance Corporation — an institution that typically helps the private sector to provide finance for developing countries — which will in turn support charterers, shipowners and key maritime insurers.

There is some international precedent. In November 2023, a facility was set up with partners including Lloyd’s insurers and the Ukrainian government to provide affordable war risk insurance for ships underpinning Ukraine’s maritime exports, particularly grain cargoes. And the DFC has provided some assistance with war risk reinsurance, something it could repeat.

Still, an updated US-organized version to cover oil, gas and fuels across the Persian Gulf would be on a far larger scale, and more complex, given the number of producers and consumers involved. Several shipowners said they would also be wary of tying their fortunes to a volatile US administration. [...]

“While President Trump’s comments about insurance and tanker escorts caused a pullback in oil prices, we question how much planning has been done on the insurance backstop thus far and think there could be a number of challenges in executing this plan quickly,” RBC Capital Markets LLC analysts said in a note.

How much money can the US DFC pony up without Congress passing new appropriations, i.e. what discretionary funds do they have to insure (potentially foreign) ships?

(As far as I can tell, the DFC board members are essentially administration inner-circle like Rubio, Bessent, or Lutnick, so there's probably not going to be any issue whether they agree to what Trump asks if the DFC funds can be potentially spent like that.)

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The answer would be $20 billion for now, according to the administration.

It seems this is a third of the "total spending cap for its [DFC] investments". Where the latter number ($60 billion) comes from Wikipedia.

Also, it's described as a "reinsurance plan", which means it would not cover the ships directly, but the insurance companies that insure those ships. The official announcement adds

DFC has identified best-in-class, preferred American insurance partners.

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  • It would cover ~200 (newish) Suezmax tankers based on a quick calc. Whether they could actually disburse those sums for that purpose without some legal challenges as to DFC's authorizations, IDK. I haven't found any commentary that says they couldn't (for now) though. Commented Mar 7 at 2:33
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    Lloyd’s Market Association found it worthwhile to comment that “it is important to note that the vast majority of these vessels are insured in the London market and for those vessels, insurance currently remains in place”. Anyhow, it seems that unsanctioning (some) Russian oil, which Bessent has done, has had a quicker effect than this talk of reinsurance, with details still being worked out. lloydslist.com/LL1156549/… Commented Mar 7 at 12:17
  • Regardless of how well the ships are insured, it is unlikely that anyone involved would want to deal with the negative publicity of a dead crew and an oil spill. Commented Mar 12 at 20:47
  • @JoeW Probably true, but "desperate times call for desperate measures". Commented Mar 13 at 16:04
  • @Barmar It is hard to use increased gas prices as a justification for those events. Commented Mar 13 at 16:48

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