President Donald Trump on Tuesday said the United States Navy will escort oil tankers through the Strait of Hormuz if necessary and directed the U.S. International Development Finance Corporation to provide war-risk insurance for maritime shipping in the Persian Gulf, a sweeping response to the disruption of global energy markets triggered by the U.S.-Israeli military campaign against Iran.
Trump announced the measures in a statement posted to social media, saying the DFC would offer political risk insurance and financial guarantees for “all Maritime Trade, especially Energy,” traveling through the Gulf “at a very reasonable price.” He added that the U.S. Navy would begin escorting tankers “as soon as possible” if necessary.
“No matter what, the United States will ensure the FREE FLOW of ENERGY to the WORLD,” Trump wrote. “More actions to come.”
STRAIT OF HORMUZ – 2 OCTOBER 2024: Satellite view of the Strait of Hormuz, a critical chokepoint for global energy supply, connecting the Persian Gulf to the Gulf of Oman. This vital maritime route facilitates the transportation of goods, including oil and natural gas, between the Middle East and the rest of the world. (Photo by Gallo Images/Orbital Horizon/Copernicus Sentinel Data 2025)
The announcement came hours after Treasury Secretary Scott Bessent and Energy Secretary Chris Wright had been expected to present Trump with a menu of options to address the surge in oil prices and the collapse of private marine insurance coverage in the region. Secretary of State Marco Rubio had previewed the administration’s response on Monday, promising that “starting tomorrow you will see us rolling out those phases to try to mitigate against that.”
The dual-track approach — federal insurance backstop plus naval escorts — draws directly on precedents set during the 1980s Tanker War, when the Reagan administration reflagged Kuwaiti tankers and provided naval protection after private insurers withdrew from the Gulf. The U.S. also provided war-risk insurance to maritime carriers after the September 11, 2001 attacks to keep global shipping moving.
But the scale of the current disruption may exceed either precedent. Oil shipments have been largely blocked through the Strait of Hormuz — the narrow chokepoint between Iran and Oman through which roughly a fifth of global oil supply passes — since Israeli and U.S. forces began striking Iran over the weekend. Multiple tankers have been damaged by strikes, and others have been stranded. War-risk insurance premiums have surged, with some providers scaling back or withdrawing coverage entirely.
By deploying the DFC as the insurer of last resort, the administration is attempting to restore market confidence without directly tapping the Strategic Petroleum Reserve, a move officials had been reluctant to make but signaled they were prepared to use if prices continued climbing. The DFC, originally created to finance development projects and compete with Chinese state lending in emerging markets, has the statutory authority and balance sheet to back maritime risk at the scale required.
The announcement is likely to put a ceiling on the fear premium that has been embedded in crude prices since the strikes on Iran began. The key distinction is between a structural supply shock — which would justify sustained price elevation — and a temporary disruption driven by insurance and logistics paralysis. If tankers can obtain federal coverage and naval escorts, the Hormuz blockage becomes the latter, not the former.
That distinction matters enormously for Federal Reserve policy. A supply-driven oil spike that proves transitory poses a very different challenge for the Fed than one that feeds into persistent inflation expectations. With the administration explicitly framing this as a short-term disruption — Trump told reporters Tuesday that Americans “may have to live with higher oil prices for a short period” but predicted prices would fall “lower than even before” once the conflict ends — the White House is signaling it views this as a one-time price-level event, not a permanent shock.
Whether markets and the Fed accept that framing will depend heavily on how quickly tanker traffic through the strait resumes and whether the administration’s insurance and escort programs prove sufficient to restore normal shipping volumes.
Politically, speed matters as much as substance. Gasoline prices are among the most politically sensitive economic indicators, felt directly by voters at every fill-up. With Republican House majorities thin enough to be threatened by sustained consumer pain, and midterm elections in November 2026, the administration had powerful incentives to move aggressively and visibly.
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