Morningstar DBRS reports U.S. insurance plan may not revive shipping in Strait of Hormuz

Escalating conflict in the Middle East has severely disrupted maritime traffic in the Strait of Hormuz, a critical route for one-fifth of global oil and significant liquefied natural gas supplies. Many insurance companies have curtailed or withdrawn coverage for war-related risks, leaving dozens of vessels anchored outside the strait. The U.S. government, through the U.S. International Development Finance Corporation (DFC), is considering offering political risk insurance and financial guarantees to shipping companies. Additionally, authorities are discussing the implementation of naval escorts for tankers. A report by Morningstar DBRS indicates that these measures may be insufficient to restore normalcy in the region. The primary obstacle remains persistent operational threats, including potential missile or drone attacks. Experts argue that even with financial backing, shipowners are deterred by the high physical risks to their vessels and crews. The industry requires more comprehensive security measures beyond insurance to ensure safe passage.