Trump Officials Discuss 'VIP Pass' Naval Escort for Strait of Hormuz Traffic

Trump administration officials are discussing ideas to kick-start oil tanker traffic through the Strait of Hormuz, including a plan that would offer a fee-based “VIP pass” naval escort through the waterway, three people familiar with the discussions said.

President Donald Trump and White House chief of staff Susie Wiles have called for ideas to convince ship owners to take the risk of transiting the strait as the United States and Iran continue peace talks, said two energy industry officials familiar with the talks. The discussions so far have centered on ways to convince insurance companies to offer coverage to travel through a narrow waterway in which Iran has successfully attacked vessels.

“The President and Susie are giving them explicit orders to figure something out,” said one person familiar with the discussions who was granted anonymity to describe private discussions. “With limited exceptions, every transit [through Hormuz] is violating insurance plans. So what can be done to accelerate the insurers to start insuring again?”

None of the ideas being discussed have been finalized, these people said. The spitballing comes as just under 500 ships, including 220 oil tankers, remain parked in the Persian Gulf outside Hormuz, according to Kpler, a commodity analyst firm. The two countries have signed a memorandum of understanding laying out issues to be negotiated in the coming months, but traffic remains largely stalled because ship owners remain wary of the fragile peace falling apart.

“Thanks to the great MOU signed by President Trump, the Strait of Hormuz will be fully open,” White House spokesperson Taylor Rogers said in a statement. “The Trump Administration expects the free flow of energy will return to normal levels seen prior to the start of Operation Epic fury in short order. Anything further attributed to anonymous sources should be deemed as baseless speculation.”

Iran’s attacks against ships in Hormuz in retaliation to the U.S and Israeli strikes against the country effectively turned the waterway — a chokepoint through which 20 percent of the world’s oil traveled before the war — into a parking lot. That disruption to the oil trade caused fuel prices to spike, creating a political headache for the White House and Republicans as they head into elections this November that could decide control of Congress.

Oil prices have fallen to $75 a barrel as the two countries have started to negotiate a possible long-term peace deal, but still remain higher than they were when the war started. Trump himself has tried to coax ship owners to send more tankers through, saying Sunday that he “fully authorize[d] the toll free opening of the Strait of Hormuz.”

Few companies have answered that call, however. One idea administration officials have discussed with industry representatives is to offer shipowners the opportunity to pay for expedited passage through Hormuz, possibly escorted by U.S. naval ships, these people said.

“There is some talk of some expedited escorted passage by paying the U.S. — like putting a VIP pass on your ship,” a second person familiar with the talks said. “The concept is that there could be a fee for expedited clearance, maybe with military escort.”

The discussions about charging a fee to tankers are also a negotiating tactic timed to the G7 meeting now happening in France to force the Europeans to become more involved in the region, said a former administration official, speaking on background to avoid repercussions. The U.S. should not have to bear the full response to patrolling the region, they said.

The idea of U.S. charging a fee on ships, the former administration official said, is “all about creating the space for France, Britain, others to move into the Gulf, take responsibility for maritime safety, security, and create an additional deterrence to the Iranians for trying to go back on the deal, use Hormuz as this long-term extortion racket.”

“If you go back to the blockade, if the deal breaks down, if you have to return to military action, the European navies are now there as well,” the former official said.

In April, Trump said the U.S. should be charging tolls to ships crossing the strait, not Iran.

“What about us charging tolls?” he told reporters. “I’d rather do that than let them have them. Why shouldn’t we? We’re the winner. We won.”

Other ideas have been pitched, these people said. One idea being taken more seriously is using the Defense Production Act to require U.S.-based insurance companies to provide coverage for vessels sailing through Hormuz, said one of the energy executives familiar with the discussions.

The Trump administration in March started offering $20 billion in “political insurance” to ship owners who might attempt the Hormuz commute. The plan found few takers, however, as owners did not want to risk physical property in waters in which Iran was using missiles, drones and small boats to inflict heavy damage on cargoes worth millions of dollars.