Israel-Iran war: Amid conflict, India & US talk on insurance for energy shipments

NEW DELHI: India is discussing with the US the possibility of securing marine insurance cover for vessels transporting oil and gas from West Asia to protect buyers from potential supply disruptions due to conflict, officials said Thursday.

The move came days after US President Donald Trump said he had asked the US International Development Finance Corporation to provide political risk insurance and financial guarantees for maritime trade in the Gulf. Trump had also said that, if required, the US Navy could begin escorting oil tankers through the Strait of Hormuz.





"We are in touch with US authorities to secure cover from the International Development Finance Corporation for vessels transiting the Strait of Hormuz," an official said.

India gets over 40% of its imported crude, 60-65% of natural gas and 90% of cooking gas supplies from UAE, Saudi Arabia, Qatar and Kuwait through this narrow channel, which has been disrupted due to the conflict. Tanker movement through the Strait of Hormuz has almost come to a halt because of the crisis.

The official, however, said that before the IDFC can provide such cover, a corpus worth hundreds of millions of dollars will have to be set up. The premium for the insurance will have to be paid by parties contracting the cargo, the official added.

Trump stepped in after global reinsurers Protection and Indemnity (P&I) clubs announced cancellation of war risk insurance for vessels transiting the strait and Iranian waters. The cancellations are effective from this week.

Amid more tankers coming under attack from Iran, insurance market Lloyd's of London said Thursday it is engaging with US authorities on Trump's plan as oil prices rise.

The US administration is yet to announce details of the insurance plan two days after Trump had said that his order was "effective immediately".