What caught the attention of one UBS analyst earlier this morning was aFinancial Timesreport stating that Lloyd's of London is pushing back against claims that insurers are choking off traffic through the Strait of Hormuz. As we have outlined, tanker flows are beginning to creep higher in the strait by midweek, with some tankers switching off their transponders while transiting the narrow waterway.

Lloyd's head of underwriting, Patrick Davison, told the FT that the insurance market is "still providing cover to basically anyone who asks," but stressed that the slowdown in Strait traffic is "not an insurance issue - it's a question of vessel and crew safety."

"All the insurers at Lloyd's are still quoting business, and will still provide cover to basically anyone who asks," Davison said.

War-risk insurance premiums for any commercial ship transiting the world's most important energy chokepoint surged well before the conflict and then skyrocketed, with rates now up twelvefold.

Therefore, the real constraint is not so much the insurance as the extreme danger facing tankers, bulk carriers, and container ships, as Tehran threatens vessels with drones, missiles, and water-based mines.

The US is in the early stages of preparing a potential $20 billion reinsurance backstop to help restart transits through the strait. Underwriters in London learned of the US plan only recently and question whether it will ever be launched.

Last week, anFTreport said the US Development Finance Corporation will create a $20 billion reinsurance facility to restart maritime cargo and oil commerce. There are other reports that the US could use its naval power to shadow commercial vessels in the waterway.

However, a Reuters report states that those military escorts are not yet ready, and that near-daily US military requests from tankers have been denied this week.

Chaos in the Strait continued in the overnight hours, with a Reuters report saying three vessels had been hit by unknown projectiles.

BREAKING:Iran strikes a Thai ship attempting to pass through the Strait of Hormuz.Thai authorities said the bulk carrier Mayuree Naree, sailing under the Thailand flag, was struck by projectiles while travelling about 18km north of Oman.🇹🇭pic.twitter.com/O30tgDoYRe

Source: ZeroHedge News