The U.S. will provide reinsurance for losses up to $20 billion in the Gulf region, to help provide confidence for oil and gas shippers during the war on Iran, the U.S. International Development Finance Corporation said on Friday.

President Donald Trump on Tuesday ordered the DFC to provide political risk insurance and financial guarantees for maritime trade in the Gulf after oil and liquefied natural gas tanker transit had ground to a halt in the Strait of Hormuz waterway off Iran, where ordinarily 20% of global oil moves daily.

The coverage will occur on a rolling basis and will initially focus on hull and machinery and cargo insurance, DFC said.

The DFC said it will work with preferred American insurance partners, without providing detail. The U.S. Treasury Department and DFC, which partners with private investors to support projects in developing countries, are coordinating with the U.S. Central Command on the next steps of its plan.

Oil shipments have been largely blocked through the Strait with a number of tankers damaged by strikes and others stranded.

War-risk premiums have jumped and some providers have scaled back or withdrawn coverage.

(Reuters)