WASHINGTON – The Donald Trump administration is exploring mechanisms to incentivize commercial oil tankers to resume transit through the Strait of Hormuz following a preliminary agreement to end hostilities with Iran.
The effort follows a memorandum of understanding reached between U.S. officials, including Vice President JD Vance, and Iranian negotiators. The agreement serves as a precursor to a potential end to the conflict, though the resumption of commercial shipping remains stalled by a lack of maritime insurance.
Because the Strait of Hormuz is the world’s most critical chokepoint for global oil exports, any disruption to its transit has immediate implications for global energy prices and supply chain stability. Roughly a fifth of globally traded crude and condensate normally moves through the narrow waterway, which links Gulf producers to major consumer markets in Europe and Asia.
Provisions of the Memorandum of Understanding
A leaked version of the memorandum contains 14 specific provisions designed to stabilize the region and facilitate economic normalization. According to officials briefed on its contents, the memorandum is political in nature but is expected to be followed by more formal agreements if the cease-fire holds.
Key elements of the agreement include:
- The reopening of the Strait of Hormuz to commercial traffic under internationally recognized rules of “innocent passage” and freedom of navigation.
- The termination of the U.S. naval blockade currently imposed on Iran, contingent on verified compliance with de-escalation measures.
- The allocation of at least $300 billion in financing dedicated to the rehabilitation and economic development of the Islamic Republic of Iran, to be disbursed over multiple years through a mix of public and private channels.
Senior administration aides stress that any enduring settlement would operate within the existing global maritime framework, including the U.N. Convention on the Law of the Sea, which sets out navigation rights and obligations for states in strategic straits.
Maritime Insurance Barriers
Despite the diplomatic agreement, the physical movement of oil is hindered by the private insurance market. Most global shipping operators rely on war-risk insurance to cover losses in high-threat environments, typically arranged through London- and Europe-based underwriters and mutual protection-and-indemnity clubs. Currently, insurance providers are not offering coverage for the Strait due to the history of successful Iranian attacks on vessels in the waterway.
Without those specialized riders, shipowners risk sailing in violation of financing covenants and flag-state safety requirements, even if hostilities formally cease.
White House Chief of Staff Susie Wiles and the President are reportedly pushing administration officials to resolve the insurance deadlock.
“The President and Susie are giving them explicit orders to figure something out,” said one person familiar with the discussions who was granted anonymity to describe private discussions. “With limited exceptions, every transit [through Hormuz] is violating insurance plans. So what can be done to accelerate the insurers to start insuring again?”
Proposed Fee-Based Security
To bridge the gap between the diplomatic deal and the reality of insurance risks, the administration is considering a system of paid naval protection.
This proposal involves the U.S. Navy providing expedited clearance and military escorts for tankers in exchange for a fee. This mechanism would essentially function as a government-backed security guarantee to reduce the risk profile for ship operators and, officials hope, give underwriters a factual basis to reinstate coverage.
Under the emerging concept, commercial carriers opting into the program would receive prioritized scheduling, routing support and layered military protection through the Strait.
“There is some talk of some expedited escorted passage by paying the U.S. – like putting a VIP pass on your ship,” a source familiar with the discussions said. “The concept is that there could be a fee for expedited clearance, maybe with military escort.”
Separately, officials are discussing whether the administration could structure any guarantees through existing U.S. risk-sharing tools, such as government-backed insurance or credit facilities, though no formal proposal has been released.
G7 Strategic Coordination
The discussion regarding tanker fees may also serve a broader geopolitical purpose. A former administration official indicated that the proposal is a negotiating tactic intended to create an opening for other G7 allies to share the security burden.
By introducing the concept of paid escorts, the U.S. may be encouraging France and Great Britain to deploy their own naval assets to the Gulf. The objective is to establish a multilateral maritime security presence that provides a permanent deterrent against Iranian interference and reassures commodity markets that the Strait will remain open in future crises.
According to the former official, the strategy is intended to prevent the Strait of Hormuz from becoming a “long-term extortion racket.” The same person said the administration wants any escort regime to be coordinated with existing G7 sanctions and export-control policies to avoid sending conflicting signals to traders and insurers.
AP Photo/Jose Luis Magana
President Trump is currently in France for the G7 summit, where U.S. officials say the future security of Gulf shipping lanes and burden-sharing for maritime patrols are expected to feature in leader-level discussions.
