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BIMCO, the world’s largest international shipping association, said the United States government’s insurance offer to shipping lines operating in the Gulf is unclear
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The proposed US military protection for ships passing through the Strait of Hormuz is also deemed “unrealistic” at this time
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US President Donald Trump made the offers through a social media post
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The US Development Finance Corporation confirmed it is ready to mobilize its risk insurance products but did not provide more details
The Baltic and International Maritime Council (BIMCO), the world’s largest international shipping association, said the United States government’s insurance offer to shipping lines is unclear while the proposed military protection for ships passing through the Strait of Hormuz is “unrealistic” at this time.
“The announcement from US President Donald Trump about selling ‘political risk insurance and guarantees for the Financial Security of all maritime trade, especially energy, traveling through the Gulf’ has yet to be explained in full,” Jakob Larsen, BIMCO Chief Safety & Security Officer, said in a statement issued to international media.
Major shipping companies have suspended operations in the region as early as March 1, a day after the US and Israel launched their attack on Iran.
READ: Major shipping lines suspend transits to/from Middle East
On March 3, Trump posted on his Truth Social handle that: “Effective IMMEDIATELY, I have ordered the United States Development Finance Corporation (DFC) to provide, at a very reasonable price, political risk insurance and guarantees for the Financial Security of ALL Maritime Trade, especially Energy, traveling through the Gulf.
The same day, DFC issued a press release saying it is “ready to mobilize its Political Risk Insurance and Guaranty products to stabilize international commerce and support American and allied businesses operating in the Middle East during this period of conflict with the Iranian regime.”
Larsen said in response, “Depending on the details of the proposal it might help tip the risk/reward ratio and stimulate more shipowners to resume operations in the high-threat area.”
The US government’s investment arm offered support to commercial shipping charterers, shipowners, and key maritime insurance providers “to minimize market disruptions and help ensure the free flow of goods and capital.”
Meanwhile, BIMCO said Trump’s announcement that the US Navy can escort tankers through the Strait of Hormuz “sounds interesting and we are awaiting further clarifications on how this would unfold.”
Larsen, however, said such military support does not seem possible at this time.
“Naval escorts would help reduce the threat for the ships being protected. That said, providing protection for all tankers operating in areas currently threatened by Iran is unrealistic as this would require a very high number of warships and other military assets,” he said.
The Strait of Hormuz is a crucial trade lane that connects the Gulf to the Indian Ocean, and about 20% of the world’s oil supply passes through it.
READ: AISL warns of delays, higher costs in sea cargo
