LARRY KUDLOW: Actions are being taken to get a string of ships through the Strait of Hormuz

Finally some very good news on oil prices. America is going to give a lot of help to insure and reinsure, in other words, guarantee, oil cargo values moving through the Strait of Hormuz. The faster we safely get those ships to successfully sail through the strait, the faster oil prices are going to peak and move back down.

There are 120 tankers sitting in Persian Gulf ports at the top of the strait, paralyzed because Lloyds of London and other reinsurers have broken their contracts and jacked up insurance rates 50 percent to 100 percent — if they’ll even write a contract — because of the so-called Iranian war risk premium.

It’s mainly this problem that is driving up oil prices. There is no scarcity of oil, indeed oil is oversupplied throughout the world. For America alone, we’re now producing 13.6 million barrels per day, and 24 million barrels per day in oils and liquid fuels, more than Russia and Saudi Arabia combined.

Ever since President Trump’s “drill, baby, drill” policy in his first term and continued now in his second term, the fossil fuel spigots have been turned back on. And America has become an oil exporter, as well as the world’s leading producer.

In fact, America is producing nearly as much natural gas as Russia, Iran, and Communist China combined, at a staggering 110 billion cubic feet per day. And one of the great parts of Mr. Trump’s courageous effort to end Iran’s 47-year war against America is that the power to disrupt oil in places like Iran and Venezuela will be removed.

So, today, the Trump administration announced that the International Development Finance Corporation, through Treasury Secretary Scott Bessent, has a detailed implementation plan, approved by Mr. Trump, to deploy maritime reinsurance, including war risk coverage, in the Gulf region. “In close coordination with” the Central Command, the announcement continued, “this plan will restore confidence in maritime trade, help stabilize international commerce, and support American and allied businesses operating in the Middle East during the conflict with Iran.”

Now, this is a major development. To be sure, the Iranian navy has basically been buried under deep water on the floor of the Persian Gulf. Not a factor. A few nitpickers actually believe that a couple of Iranian motorboats with a rifle will sink a supertanker filled with oil. I don’t believe that for a minute.

However, the great United States Navy is going to be a player here. Perhaps with ships at both ends of Hormuz. And other ships accompanying oil supertankers, as they make their way through the waterway toward their destination.

So we’d be insuring any losses and providing military protection to get oil to its proper destination.

World oil prices have basically jumped $30 in the last week because of the wartime risk premium. I don’t know where the peak is, but when America gets this packaged together, with insurance, naval protection, many ships passing through the Strait of Hormuz, it will be confidence inspiring. We will not be far away not only from a peak in oil prices, but a gradual descent back to normalcy, which would be something near $60 a barrel, or perhaps the mid $50s.

Little Iranian motor boats will have nothing to say about it.