US Launches Insurance Plan for Hormuz Tankers; Plan Falls Short

The US-Israel war with Iran has disrupted roughly 20% of global crude oil and LNG flows through the Strait of Hormuz, driving Brent crude to US$119.50 a barrel and triggering a G7 emergency meeting on strategic reserve releases, developments with direct implications for Mexico's energy costs, trade competitiveness and manufacturing sector, which depends on stable fuel and gas prices. A US$20 billion US reinsurance program and potential naval escorts have so far failed to restore certainty on tanker traffic, with analysts warning that physical security concerns and prolonged conflict could sustain price pressure on energy-intensive industries including petrochemicals, logistics and export manufacturing.

The United States launched a US$20 billion reinsurance program on March 6 to restore tanker traffic through the Strait of Hormuz, the conduit for roughly 20% of the world's crude oil and LNG exports. As the US-Israel war with Iran entered its tenth day, oil prices rose sharply, triggering emergency talks among G7 finance ministers.

The US International Development Finance Corporation (DFC) will insure losses up to US$20 billion on a rolling basis, in close coordination with the Treasury Department and US Central Command. "We are confident that our reinsurance plan will get oil, gasoline, LNG, jet fuel, and fertilizer through the Strait of Hormuz and flowing again to the world," DFC CEO Ben Black said.

Donald Trump signaled that naval escorts could follow. "As soon as it is reasonable to do it, we will escort ships through the straits and get the energy moving again," US Energy Secretary Chris Wright said. However, the US military has not confirmed these operations. US officials told Fox News Digital that no convoy mission has yet been launched and declined to speculate on future operations.

Matt Wright, Senior Freight Analyst, Kpler questioned whether the reinsurance program addresses the underlying problem. "There needs to be some confidence that Iran's ability to continue to wage war has diminished," he said, noting that physical security not insurance  is the primary reason tankers have stopped moving. 

Rohit Rathod, Senior Analyst, Vortexa, said the measures announced by the Trump administration may fall short of guaranteeing broad safe passage through the Strait, though individual vessels could still make it through. "The attacks could still take place," Rathod said. "What is more realistic is that insurance stays high but we will have individual players making deals with the Iranians to get exemptions for their ships."

In addition, industry analysts and shipowners expressed doubt that the combination of naval protection and federal reinsurance coverage would be enough to reverse the upward pressure on energy prices.

Iran has stopped short of formally closing the waterway. "We have no intention of closing it right now," Foreign Minister Abbas Araghchi told NBC on March 5, adding: "As the war continues, we will consider every scenario." 

Markets React as G7 Calls Emergency Meeting

The Strait handles roughly 20% of the world's crude oil and one-fifth of global LNG exports, according to the US Energy Information Administration. The disruption has driven Brent crude up more than 25%, touching US$119.50/b on March 9 before falling back to around US$107/b. 

US West Texas Intermediate traded at approximately US$104/b. US crude prices are up 35% on the week. UK gas prices for month-ahead delivery surged nearly 25% to 171p a therm before slipping to around 156p. The average price for regular gasoline in the United States rose 11% last week to US$3.32 a gallon, according to motorists group AAA.

European and Asian equity markets retreated sharply. Germany's DAX and France's CAC 40 each fell approximately 2.5%, London's FTSE 100 dropped, Japan's Nikkei 225 shed 5.2% and South Korea's Kospi closed down 6%, briefly triggering a circuit breaker to curb panic selling. BP and Shell were among the few FTSE 100 companies to post gains.

Trump dismissed concerns over rising fuel costs, posting on Truth Social: "Short term oil prices, which will drop rapidly when the destruction of the Iran nuclear threat is over, is a very small price to pay for USA, and World, Safety and Peace. ONLY FOOLS WOULD THINK DIFFERENTLY!"

G7 finance ministers, including UK Chancellor Rachel Reeves, will hold an emergency meeting on March 9 to discuss the economic impact of the conflict. The Financial Times reported the meeting will consider a joint release of petroleum reserves coordinated by the International Energy Agency (IEA) which, if enacted, would mark the first such coordinated release since Russia's full-scale invasion of Ukraine in 2022.

US-Israel War With Iran Enters Day 10 Amid Energy Crisis

The conflict began on Feb. 27 when the United States and Israel launched a coordinated wave of airstrikes against Iran under an operation named Epic Fury, targeting nuclear facilities, military installations and, later, oil depots, and fuel storage sites across the country. The strikes marked an escalation of long-standing tensions between Washington, Tel Aviv, and Tehran over Iran's nuclear program. Iran responded with missile launches and drone attacks against Gulf states and Israeli targets, drawing the broader region into the conflict.

On the tenth day of operations, a senior Iranian official has warned that Israeli strikes on oil and fuel depots have pushed the conflict into a "new phase," threatening retaliatory strikes on regional energy infrastructure.

Iran named Mojtaba Khamenei as the new supreme leader following the death of his father, Ali Khamenei. Iran's Revolutionary Guard Corps said it was ready to "fully obey and sacrifice their lives" for him. Analysts say his elevation signals continuity of hardline policies. Trump had previously called the selection "unacceptable."

Military operations are ongoing across the region. Israel launched strikes on Beirut and Iran, while Gulf states reported interceptions of Iranian drones and missiles. Bahrain said at least 32 people were wounded in an Iranian drone attack on a residential area, and national oil company BAPCO declared force majeure on its operations after a fire broke out at its industrial zone. The US State Department ordered non-emergency diplomats to leave Saudi Arabia following the death of a US service member in the country last week.

US War Secretary Pete Hegseth said the United States was still investigating a strike on an Iranian elementary school that killed at least 168 children, according to Iranian state media, after video appeared to confirm a US airstrike targeted a naval base adjacent to the school. Trump has cast blame on Iran for the strike.

In addition, Trump said he and Israel would jointly decide when the war ends, with Washington holding final say, while Hegseth said the United States would set "the terms of surrender" with Iran.