The US will provide reinsurance covering up to $20 billion in potential losses in the Gulf region to bolster confidence among oil and gas shippers during the conflict with Iran, reported Reuters citing the US International Development Finance Corporation.

President Donald Trump had this week directed the agency to offer political risk insurance and financial guarantees for maritime trade in the Gulf after transits by oil and liquefied natural gas tankers had ground to a halt in the Strait of Hormuz waterway off ​Iran, where ordinarily 20% of global oil moves daily, it stated.

Trump also stated the US Navy could ​escort ships in the Gulf. But some Navy vessels are carrying out strikes against Iran and shooting down its missiles. Escorting ships also could be risky for naval escorts.

The DFC said it will work ​with preferred American insurance partners without providing any detail. 

This comes at a time when a number of tankers have been damaged by strikes and others remain stranded, said media reports.

A shipping ⁠expert meanwhile pointed out that the plan may not be enough to assure the energy shipping industry if tensions flare.

"If the war keeps escalating, the maritime ​and energy domains will continue to serve as arenas for Iran ​to retaliate," said ⁠Noam Raydan, senior fellow at the Washington Institute for Near East Policy.

Raydan said any calming effect of the coverage could be affected if Iran-backed Houthis resume attacks on shipping in ⁠the Red ​Sea. "If that happens, there will be two choke points ​critical to global trade under military threat. How will shipping be protected in that case?"