The U.S. has promised to safeguard the Strait of Hormuz and ensure the flow of oil as Iran is threatening to attack ships passing through it.
In a Truth Social post on Tuesday, U.S. President Donald Trump wrote, “I have ordered the United States. Development Finance Corporation (DFC) to provide, at a very reasonable price, political risk insurance and guarantees for the Financial Security of ALL Maritime Trade, especially Energy, travelling through the Gulf.”
“If necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz,” he said, adding “no matter what, the United States will ensure the free flow of energy to the world.”
The Strait of Hormuz in the Persian Gulf is a crucial shipping lane and handles about 20 per cent of the global oil and LNG supply flows.
Iran’s threats of attacks of ships passing through the Strait of Hormuz has sent oil prices soaring, made worse by the pause of oil production in several Gulf states due to the attacks.
Crude oil is up 15% to $82 per barrel compared to last week.
The higher oil prices could drive up the prices of shipping costs and cause a spiral effect on higher cost of transporting food and other goods.
Being the top or second-largest oil producer globally, the increase in gas prices in the U.S. is much lower than other countries.
The national average of a gallon of gas in the U.S. has risen 12 per cent to $3.10.
The increase in gas prices in Europe was much worse, having risen by 40 to 45 per cent.
Trump said he does not expect the oil prices to stay elevated as the military campaign against Iran is projected to last about “four to five weeks.”
“If we have a little high oil prices for a little, but as soon as this ends, those prices are going to drop, I believe, lower than even before,” he said.
Iran’s attacks are also affecting countries in other regions.
Tanzania in East Africa, and Indonesia in Southeast Asia are adjusting their budgets and government spending to ensure they have enough oil given the uncertainty of the war.
U.S. Secretary of State Marco Rubio said the U.S. is working to stop Iran’s attacks by taking out its military capabilities.
“Number one is our mission and our focus is the destruction of their ballistic missile capabilities and their ability to manufacture them, as well as the threat posed by their Navy to global shipping,” he said.
