US stocks cut losses after Trump announces steps to safeguard Hormuz Strait
US equities, initially hit by a global rout and surging oil prices due to the Middle East conflict, pared losses after President Trump announced measures to protect commerce in the Strait of Hormuz, a critical global crude supply route.
On March 3, 2026, US stocks pared earlier losses after President Donald Trump announced measures to safeguard shipping through the Strait of Hormuz amid escalating US-Iran tensions. The announcement came during a global equity rout triggered by surging oil prices following US-Israeli strikes on Iran that killed its supreme leader, sparking retaliatory attacks on oil facilities in Qatar and Saudi Arabia, US military bases, and the US embassy in Saudi Arabia. Oil prices had spiked over 5% to $75.22 per barrel, with Brent crude reaching $81.40 after peaking above $85, reflecting fears that prolonged disruptions could push prices over $100 per barrel.
President Trump directed the US International Development Finance Corporation to offer political risk insurance at low rates for oil tankers and commercial ships in the Gulf region, effective immediately. He also stated that 'if necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz, as soon as possible.' These measures addressed insurance hikes and cancellations by private firms as Iran had attacked vessels, rendering the strait—which handles 20-21 million barrels of oil daily (about 20-25% of global seaborne oil)—effectively impassable for days.
The announcement followed a White House meeting with Energy and Treasury secretaries and came as marine insurance companies were dramatically increasing rates or canceling coverage for ships transiting the region. Trump's intervention aimed to ensure the free flow of energy worldwide, with the US government potentially backing insurance needed for tankers to continue traveling through the strategic waterway.
The Strait of Hormuz is a critical global chokepoint, with an average of about 20 million barrels of oil passing through daily in 2024, amounting to roughly 20% of global liquid petroleum consumption. The disruptions had already caused US LNG margins to soar as traffic through the strait was effectively halted, cutting off supplies from Qatar's 77 million ton per year Ras Laffan facility and UAE's exports. Trump downplayed long-term oil price spikes, predicting prices would drop once the conflict ends, while markets responded positively to the assurance of military protection for vital energy shipments.
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