Recently, tensions in the Middle East have caused disruptions to shipping in the Strait of Hormuz, the world's most important energy corridor, triggering a chain reaction.

In order to stabilize market confidence, the United States is increasing the involvement of "financial means".

On Friday, April 3, Eastern Time, the International Development Finance Corporation (DFC), a subsidiary of the U.S. government, announced that it will provide up to $40 billion in reinsurance support for oil tankers passing through the Strait of Hormuz, and bring in more large U.S. insurance companies to participate.

This is equivalent to "insuring" tanker transportation, and in case of an accident, there is a government to cover it.

Why do this? Because once this channel is blocked, the impact is too great: global oil prices are rising, and countries that rely on Middle Eastern oil (such as India) bear the brunt; Domestic gasoline prices in the United States have also risen back to more than $4 per gallon, increasing the burden on ordinary people and pushing up inflation.

In the past, the United States mainly relied on warship escorts to ensure the safety of waterways; Now, it has begun to use insurance and financial tools to "underpin" - to maintain global energy flows without the use of force.

The United States pulled up six major insurance companies to "insure tankers" in the Middle East

The International Development Finance Corporation (DFC), a subsidiary of the U.S. government, announced on Friday, April 5 that it will double the size of reinsurance support for shipping in the Strait of Hormuz from $20 billion to $40 billion. This is the second step after the program was launched in March.

How does it work?

DFC provides $20 billion in government guarantees; In addition, commercial insurers such as Chubb jointly contributed another $20 billion; A total of $40 billion is spent on insurance support for tankers and cargo passing through high-risk waters, such as the Strait of Hormuz.

Among them, Chubb Insurance serves as the "leader" and is responsible for: setting premium prices and insurance terms;

issuing policies; Process all claims.

The new cooperative insurers include six U.S. industry giants: Travelers, Liberty Mutual, Berkshire Hathaway (at the helm of Buffett), AIG, Starr, and CNA.

These companies have extensive experience in marine insurance and war insurance, which can significantly improve the coverage and reliability of the entire insurance system.

Why? Tensions in the Strait of Hormuz have led to soaring insurance costs and no one even dares to underwrite them for fear of being attacked or seized

Now, with the government's backing and large insurance companies, the risk is shared, premiums can be lowered, and shipping is more willing to resume traffic.

Want to get insurance? Go through the "safety review" first

The Strait of Hormuz is one of the world's most important energy corridors, responsible for about 20% of the world's oil and liquefied natural gas shipments. But in recent weeks, the waterway has almost "shut down" due to intensifying regional conflicts, causing violent shocks in global energy markets.

To restore shipping confidence, the US DFC has launched a $40 billion reinsurance program. But want to join? It's not that simple.

The application conditions are strict: the owner must provide detailed information, including: where the ship sailed from; who owns the ship; who owns the cargo; who is the financing bank behind it

DFC and partner insurers use this information for three things: sanctions screening (such as whether banned countries or entities are involved); Know Your Customer (KYC) investigations (to confirm identity and background); and Combine it with other intelligence to determine risk

Only vessels that pass the audit can obtain this government-backed insurance. In other words, this plan is not only a "financial tool", but also a compliance and risk filter

But shipping companies are still waiting and seeing - because the real risk is not money, but life.

Despite the increased insurance protection, many shipping companies still dare not pass easily. The reason is simple: personal safety is not guaranteed. Iran still has the ability to use drones, missiles and even mines, posing a real threat to ships

Can financial means replace warship escort? It's hard to say yet

The United States expands the scale of shipping insurance in the Strait of Hormuz this time, continuing its recent strategy: first stabilizing the market with economic and financial instruments, and trying to avoid direct military intervention

But the reality is clear: financial means are more like "shock pads" than "antidotes"

As long as security threats in the Middle East remain — such as drones, missiles or mines — even if the insurance limit is doubled, many shipping companies will still be afraid to leave.

The next key depends on two things: whether the regional conflict will ease; whether the United States will take further action, such as sending warships to escort it, or increasing military intervention

Only when these more "hard" measures keep up can the $40 billion insurance "safety net" really work. Otherwise, it may be difficult to make oil tankers pass with peace of mind by financial means alone.

Jingtai view|Short-term volatility intensifies, long-term focus on three types of opportunities

For the energy market:

Oil prices are easy to rise and difficult to fall in the short term: the risk premium for supply disruption is still there; LNG traders (such as Cheniere) may benefit from the European/Asian gas rush; If US shale oil companies (such as EOG and PXD) hold steady at $85, their profit expectations will be revised upward.

For the finance and insurance sector:

Participating insurance companies such as Chubb and AIG: short-term underwriting risks have risen, but government reinsurance has greatly mitigated losses; Berkshire Hathaway: Buffett once again showed the classic strategy of "taking over in crisis", which is a high-quality risk pricing opportunity in the long run; Reinsurance ETFs (such as REAX): If geopolitical risks normalize, reinsurance demand may increase structurally.

For shipping and logistics:

Tanker operators (e.g. Euronav, Frontline): Freight rates have soared, but safety costs may eat into profits; Alternative route service providers (such as Suez, Cape of Good Hope bypass supporters): short-term demand surges; Be wary of dry bulk and container shipping: if energy costs are transmitted to the global supply chain, freight rates may rise across the board.

Risk warning:

If the United States is eventually forced to intervene militarily, geopolitical risks will be exponentially magnified; If the insurance mechanism encounters large-scale claims (such as the sinking of multiple oil tankers), it may trigger pressure on the reinsurance chain.

If global inflation rebounds due to persistently high energy prices, the Fed's interest rate cut expectations may be postponed, suppressing risk assets.