Saudi Arabia is considering a plan to establish a new state-backed insurance program for ships in the region as it looks for ways to keep trade flowing. The plan would aim to provide cheaper cover for vessels transiting the Gulf or Red Sea, with as much as 700 million riyals ($186 million) in commercial cover, and additional coverage provided by the Saudi Export-Import Bank, the Financial Times reported.
Other Saudi insurers and international firms could also be included. The talks are still at an early stage and may not result in an agreement, the FT said. Shipping traffic through the Strait of Hormuz and the Red Sea remains severely disrupted as the Iran conflict nears the end of its sixth month, and while more oil may be exiting the region than previously thought, higher insurance costs and restricted coverage are impacting trade flows. That’s hitting Gulf economies, which rely on the waterways to export hydrocarbons and import everything from cars and machinery to food and agricultural products.
Saudi Arabia has already been forced to reroute oil tankers thousands of miles around Africa to avoid Houthi attacks in the Red Sea, Bloomberg reported.