President Donald Trump’s initiative to reopen the Strait of Hormuz through a multi-billion dollar maritime insurance program hasn’t attracted any buyers yet.
Since Trump shared the proposal on March 3 via a Truth Social post, the U.S. International Development Finance Corporation (DFC) has not issued any insurance coverage, according to information provided to the Daily Caller News Foundation. The plan was expected to be valued at up to $40 billion, as stated in a DFC press release on April 3.
Right now, there are “no active policies,” a DFC representative said. They mentioned that the DFC is in close coordination with the White House and other partners. If needed, the Maritime Reinsurance facility is set to provide $40 billion of coverage to fulfill Trump’s directive aimed at restoring maritime trade through this vital route.
The Strait of Hormuz has been, for all intents and purposes, closed to shipping since the onset of the U.S.-Israeli conflict with Iran on February 28, according to an analysis by the U.S. Energy Information Administration. In the meantime, Iran has started to offer Bitcoin-backed insurance for its shipping companies that wish to navigate the strait, as reported by Bloomberg, citing documents from the Iranian-based Fars news agency.
The DFC’s announcement indicated that Chubb would be the primary insurance partner for this initiative.
According to a spokesperson from Chubb, the DFC program is designed to insure vessels while they are under naval escort, but as it stands, no escort has been provided.
The White House, along with CENTCOM and Chubb, has not yet responded to requests for comments.
Project Freedom
CENTCOM shared on May 3 that it would support this mission through the “Project Freedom” programme, aiming to restore navigation rights in the Strait of Hormuz.
The mission to protect merchant ships seeking to navigate this corridor is backed by “destroyers, over 100 land and sea-based aircraft, multi-domain unmanned platforms, and 15,000 service members,” according to CENTCOM.
Adm. Brad Cooper stated during a media call on May 4, “We’ve now opened a passage through the Strait of Hormuz for the free flow of commerce.” He added that U.S. forces in the Middle East are working to uphold navigation rights for commercial shipping.
In a Truth Social post, Trump declared, “Effective IMMEDIATELY, I have ordered the United States Development Finance Corporation (DFC) to provide political risk insurance and guarantees for the financial security of ALL Maritime Trade, especially Energy, through the Gulf at reasonable rates.” He noted that U.S. Navy escorts would begin for tankers as soon as possible, emphasizing America’s intent to ensure the global flow of energy.
Shortly after the start of Project Freedom, Trump mentioned that the operation would be “paused for a short period of time” in a subsequent Truth Social update.
Reports suggest that the DFC program has not gained traction because it relies on U.S. naval escorts that have not yet been established. When the conflict began, Iran launched attacks on multiple oil tankers, and sporadic assaults have continued since, including a May 4 drone attack on the ADNOC Logistics & Services vessel Barakah by Iranian drones.
Cooper announced that the U.S. Navy escorted two U.S.-flagged merchant vessels through the strait, but it appears no other vessels have followed since then.
The Strait of Hormuz is critical, as it supplies about one-fifth of the world’s liquid petroleum consumption, according to the U.S. Energy Information Administration.
Significant amounts of oil pass through the strait, and alternatives are limited if it closes. In 2024, oil flow through the strait averaged around 20 million barrels per day, highlighting its importance in global oil consumption.
Insurance rates for shipping in the Gulf have significantly increased, currently ranging from 3% to 8% of a vessel’s cost, a stark contrast to pre-war levels of less than 1%.
