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Ship operators and brokers questioned President Trump’s plan to provide insurance and naval escorts for tankers passing through the Strait of Hormuz, which he proposed to keep energy supplies flowing as the conflict with Iran continues.
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After several maritime insurers cancelled coverage for ships sailing in the Persian Gulf, Trump said in a Truth Social post that he ordered the U.S. International Development Finance Corp. to provide, “at a very reasonable price,” political risk insurance for all maritime trade in the Gulf. He said the Navy escorts, if necessary, could begin as soon as possible.
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The IDFC is a federal institution tasked with attracting private capital to developing countries and mitigating investment risks. It doesn’t have the authority or financial resources to cover ships crossing the Strait, said William Henagan, a research fellow at the Council of Foreign Relations.
The president’s pledge came as more than 3,000 vessels were stuck in Persian Gulf ports waiting to cross the Strait, according to Clarksons Research. Among the idled vessels were 112 crude tankers, 195 product tankers and 114 containerships. The lack of tanker supply has sent daily spot rates for VLCCs soaring to double or more than the $200,000 reported at the end of last week.
Crude futures rose again Tuesday, but eased after Trump’s offer of insurance and naval protection. While diesel futures prices, too, receded a bit from the day’s surge higher, the runup still dings truckers transporting goods and produce.
Aside from a surge in the cost of fuel, airlines are weighing the viability of routes that have relied on the Middle East corridor. Rerouting around the region can add hours of flight time, which not only uses more fuel, but also upends tightly managed schedules.
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The U.A.E.’s two biggest long-haul air carriers, Emirates and Etihad, extended a pause on all scheduled flights at their Dubai and Abu Dhabi hubs, but said they would fly a limited number of repatriation and cargo flights in and out of the country.
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Oman Air Cargo said it would add extra belly-hold capacity in the coming days through new flights on some routes.
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