DEMAND is building to get tankers moving through the Strait of Hormuz.

Insurers are ready to price the risk and there are owners now willing to take the risk premium with at least three Greek owners actively pricing suezmax runs through the danger zone, at night, with no AIS.

Less than 24 hours ago, industry officials were told in no uncertain terms by the US Navy that military escorts were off the table, at least for the time being. Oil companies and shipowners had been briefed that there was no capacity to deploy naval assets to move oil and there was no timeline on that changing any time soon.

US President Donald Trump however, had other ideas.

Posting on Truth Social in the afternoon (EST time) on Tuesday, Trump said the US Navy “will begin escorting tankers through the Strait of Hormuz, as soon as possible”.

In addition, Trump said he had ordered the US Development Finance Corporation to provide “political risk insurance and guarantees for the financial security of ALL maritime trade, especially energy, traveling through the Gulf”, which will be provided “at a very reasonable price”.

How quickly things change.

The oil market had been expecting a short-lived disruption, so any suggestion of an extended Hormuz shut down was always going to be dangerous economically and politically.

Trump’s announcement does not immediately open the Strait of Hormuz and we have no clarity yet on timing, which matters.

Strategic reserves are well stocked and US shale is flexible and can respond with relatively short lead times, bringing on new supply in the face of higher prices in three to six months.

The market entered this war in surplus — Saudi Arabia and the UAE together have around 3.5m bpd of spare capacity, which could offset damage to Iran’s sub-4m bpd production if facilities were hit, according to the analysts over at Oxford Economics.

Opec+ has announced a 206,000 barrel a day production increase from April onwards, signalling willingness to add supply while still retaining spare capacity if disruption worsens.

But in the short term, a major snarl up in onshore production, storage and a lack of tankers to load is already causing big problem that will have significant knock-on consequences for the markets.

The main constraint is not whether oil can be produced, but whether it can leave the Middle East Gulf, and when.

A few dark transits from Greeks willing to risk the missiles does not open the energy chokepoint and the future promise of naval escorts does not fully eliminate the risk for the majority of tankers.

This is a fast-moving story and it is far from over.

Richard Meade
Editor-in-chief, Lloyd’s List

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