Posted on 03/25/2026 6:58:51 AM PDT by PGR88
When the seven P&I clubs belonging to the International Group issued 72-hour cancellation notices for war risk coverage in the Persian Gulf on March 5, they did not just raise costs. They made transit impossible.
P&I clubs insure roughly 90 percent of the world’s ocean-going tonnage. Without their coverage, ships cannot sail. Port authorities will not let them dock. Banks will not finance the cargo. Charterers will not book the vessel. The entire system, from loading berth to discharge terminal, is underwritten by a chain of contracts that begins with a club in London, Oslo, or Tokyo. When the clubs pulled war risk extensions, that chain broke. Not for a few ships. For the global fleet.
War risk premiums jumped from 0.25 percent to 1 percent of hull value, renewable every seven days. VLCC charter rates quadrupled to nearly $800,000 per day. Over 1,000 vessels are now trapped in the Persian Gulf, burning charter costs with nowhere to go. By March 3, only four ships crossed the Strait, down from a seven-day average of seventy-seven.
Then Trump did something that almost nobody in the press understood.
He ordered the U.S. International Development Finance Corporation to create a $20 billion maritime reinsurance facility, with Chubb as lead underwriter, making the United States government the insurer of last resort for Gulf shipping. A sovereign nation positioned itself as the backstop for war risk insurance on the world’s most critical maritime chokepoint. The DFC facility, coordinated with US Central Command and Treasury, offers hull, machinery, and cargo coverage on a rolling basis to eligible vessels.
The United States now controls the on/off switch for the Strait of Hormuz. Not through naval firepower. Through insurance.
(Excerpt) Read more at gcaptain.com ...
The only real fear of the south china sea is the N Korea start a war they are not partipants in by week 2.”
That appears to be the calculation of the South Korean government. They elected not to participate in the recent US/Japan/SK naval and air defense drills. Seems obvious that they intend to “sit out” any PLA move against Taiwan.
“But besides Trump’s tweet let’s look at the evidence: look what the Navy is doing. Or rather, not doing. The U.S. Navy is in no rush to solve this problem. They are methodically, deliberately, taking their time. Army battalions are not mobilizing. The Marines called in from Japan are slow-steaming across the Pacific; it could be weeks until they’re ready. Minesweepers are still far from the battle space. Carriers are slowly rotating, not surging. They are working to reopen the Strait but do not appear to be in any hurry. Someone at the top told them to take their time. That signal has to be coming from the White House. And now you understand why. The longer the Strait stays closed, the more the leverage builds. Every day, 1,000 trapped vessels burn charter costs. Every day, European energy dependence deepens. Every day, the DFC reinsurance facility becomes more central to the global shipping system. Every day, the case for concessions on tariffs, the IMO, Greenland, and the SHIPS Act becomes harder for Europe to refuse. And what does the Navy get for playing along? Support for battleships and stronger allies willing to spend money building their own destroyers when it becomes clear to the world how weak their navies have become.”
Fascinating to see if this is how it plays out
All the things that Trump has lost on lately, he might be getting after all.
Todays Navy is not the World War II Navy. The World War II Navy took risks and did dirty work. Todays Navy doesn’t want to risk damage to their expensive fragile ships. They are unwilling to take risks. Ship replacement and repair takes forever unlike in the past. Our country doesn’t have the means to repair and produce ships quickly. A laundry fire recently knocked out an aircraft carrier.
The Navy’s glory days are in the past and will not return unfortunately.
Keep killing thr regime ppl for another 6 months.
I'm feeling a little dense. Honest question -- if neither Iran nor the US have ratified this foundational agreement for maritime law, does that give Trump some degree of latitude?
I'm not implying that the US can "do whatever we want", but if we haven't ratified it, then we wouldn't be bound by it, right? Seems like this increases our options.
What interest does the U.S. even have in maintaining passage for commercial vessels through the Strait of Hormuz?
In other words … why would the U.S. dedicate any military or financial resources to this particular effort?
Especially in terms of cash flow.
The only flaw in this theory is that it’s bad for the world’s economy. Saudis, Gulf states, China, India, Japan, Indonesia, Australia and the EU get a lot of pain. That does serious damage to our economy too.
All our meds come from China, India and the EU…. We still get massive imports from China. Oil is fungible and the shortage affects OUR prices also.
All of that points straight to a catastrophic loss of both houses at the midterms. Midterm voters are all about the the economy, not an Israeli driven foreign adventure. Exciting air raids, subs sinking ships, daring commando raids etc… those excite an element of maga… but the swing crowd that put him in the White House are leaving and not coming back.
Playing the long game when your power gets drastically slashed in 7 months makes no sense. If somebody genuinely sincerely worries about the well-being of Israel, if I ran is gonna build a bomb etc… you better take care of business at home. Because in seven months, if you don’t take care of people at home, you lose everything and then none of those other things can ever be done. I don’t know how people cannot see that. Nobody was riding higher than George Bush after Desert storm, little over a year later he got blown away by Clinton in a landslide because “it’s the economy stupid”. And for those who are going to say it was because of Ross Perot, yeah, and the reason he got the votes he did was over the economy..
This should be an incentive for the Arab gulf states to build a canal to bypass the SOH. They have had 47 years and zip has been done.
That’s the major point of Venezuela, Iran and Cuba in what seems to be all of a sudden. Its to limit China’s access to energy, get them out of Cuba before they can start that military base they are talking to the Cubans about and help us to achieve dominance in the AI race.
We also get forward movement on the Abraham Accords with a peaceful non nuclear Iran.
Great article
At a cost.
Don’t pirates always have a payment option?
What dish*t thought offshoring that was a good idea?
They probably get free access.
Yes, the USN is long oil futures! /s
The same ones making bank on this war, shorting oil, grabbing crashed SP500, buying magnet and drone companies... all with insider knowledge.
They got rich sending the production away, not they get paid again!
Bkmk
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