US considers oil tanker insurance to ease Middle East crude shipping, sources say
Two sources say that U.S. president Donald Trump will review on Tuesday a number of policy options to control energy prices in the face of the escalating conflict in the Middle East. One option is for the government help oil tankers obtain insurance.
Since Israeli and U.S. troops began attacking Iran on the weekend, fighting has disrupted Middle East oil tanker deliveries.
Sources, who spoke on the condition of anonymity, said that Treasury Secretary Scott Bessent will meet with Trump Tuesday afternoon in order to discuss the issue. They are also expected to finalize their response.
Trump has made the lowering of energy prices one of his main economic messages, arguing cheaper fuel is crucial to easing inflation while supporting consumer spending.
The war against Iran could lead to a rise in prices, which would undermine Republican efforts to maintain power in the U.S. Midterm elections in November.
The Strait of Hormuz is a narrow, waterway that connects Iran and Oman, and through which a fifth of all oil shipped in the world passes. A number of tankers have been damaged by strikes, and others are stranded.
Industry sources report that shipping companies and insurers are reevaluating their exposure in the region. War-risk premiums are rising rapidly, and some providers have reduced or withdrawn coverage.
Tankers that are willing to take on the risk of transiting this area have been forced to pay higher insurance rates, which they often pass on to their charterers.
It is not the first time that the United States has provided support for tanker insurers. Washington reflagged tanks and provided naval escorts during the Iran-Iraq war in the '80s when private insurance companies withdrew their coverage. After the September 11, 2001 attacks, the U.S. issued policies to keep shipping going despite the increased war-risk premiums.
Marco Rubio, Secretary of State, told reporters that the U.S. had a "program" in place to combat rising energy prices. Wright and Bessent would implement it.
Rubio, without giving any details, said that "starting tomorrow you will be able to see us roll out these phases in an effort to mitigate against this."
One source claimed that the administration had been reluctant to tap into?the nation’s Strategic Petroleum Reserve. However, officials could signal by Tuesday that they were prepared to do so if oil prices continued to rise. (Reporting and writing by Jarrett Renshaw, Timothy Gardner; Editing and proofreading by Paul Simao).
(source: Reuters)
