In its latest bid to encourage passage through the Strait of Hormuz, the U.S. has increased its reinsurance guarantee for ships to $40 billion from $20 billion. Several providers, including Berkshire Hathaway (BRK.B), Chubb (CB), and AIG (AIG), will help provide the new guarantee. Reinsurance is when an insurance company buys insurance from another insurance company.
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New trading tool for QQQ bulls“Along with Chubb, these leading American insurers bring deep underwriting experience in marine and marine war coverage, strengthening our efforts to help restore confidence in maritime trade,” said U.S. International Development Finance Corp CEO Ben Black.
Hormuz Blockage Sends Oil Prices Soaring
Hormuz handles 20% of global oil flows and has operated at a near standstill for over a month amid threats of attack from Iran. The blockage has resulted in a dramatic surge in oil and gas prices as supply dwindles.
The average price for a gallon of gas in the U.S. has risen by 37%, or $1.11, since the start of the conflict on February 28, stoking inflation fears. Earlier this week, President Trump said that he expects Hormuz to “open up naturally” once the conflict ends.