WASHINGTON/London/BAGHDAD/DUBAI:
President Donald Trump on Wednesday tempered days of angry rhetoric and suggested Iran was “standing down” after it fired missiles at U.S. forces in Iraq, as both sides looked to defuse a crisis over the U.S. killing of an Iranian general.
Trump said the United States did not necessarily have to hit back after Iran’s attack on military bases housing U.S. troops in Iraq, itself an act of retaliation for the Jan. 3 U.S. strike that killed Iranian commander Qassem Soleimani.
Trump said no Americans were hurt in the overnight attacks. The Pentagon said Iran had launched 16 short-range ballistic missiles, at least 11 of which hit Iraq’s al-Asad air base and one that hit a facility in Erbil but caused no major damage.
“The fact that we have this great military and equipment, however, does not mean we have to use it. We do not want to use it. American strength, both military and economic, is the best deterrent,” Trump said.
“Our great American forces are prepared for anything. Iran appears to be standing down, which is a good thing for all parties concerned and a very good thing for the world,” he said.
Trump said the United States “will immediately impose additional punishing economic sanctions on the Iranian regime” in response to what he called “Iranian aggression.” He offered no specifics.
Iranian Supreme Leader Ayatollah Ali Khamenei, addressing a gathering of Iranians chanting “Death to America,” said the missile attacks were a “slap on the face” of the United States and said U.S. troops should leave the region.
Foreign Minister Mohammad Javad Zarif had said the strikes “concluded” Tehran’s response to the killing of Soleimani, who built up Iran’s network of proxy armies across the Middle East. He was buried in his hometown, Kerman, after days of national mourning.
Re/Insurance Industry on alert
Analysts at ratings agency S&P Global Ratings have said that reinsurance firms are likely to review rates for war coverage in the Gulf following the U.S. killing of Iran’s top military commander, General Qassim Soleimani.
S&P has said that the ratings on insurance companies in the Gulf are not immediately affected by the ongoing and growing geopolitical tensions between the U.S. and Iran, which has intensified since President Donald Trump ordered an airstrike which assassinated General Qassim Soleimani.
“Reinsurers are also likely to review rates for war coverage, as was the case following the attacks on oil tankers in the Strait of Hormuz in 2019, which led significant increases,” explains S&P.
Analysts add that a further escalation of the conflict could undermine both confidence and investment in the region, which in turn would lead to a slowdown in economic growth and greater market volatility in the region.
“We will closely monitor the potential long-term effect of the geopolitical tension in the region and the subsequent impact on the insurers’ business risk and financial risk profiles,” says S&P.
The Joint War Committee (JWC), which is comprised of underwriting representatives from Lloyd’s and IUA company markets, has also said that currently, there is no dramatic change to the strategic maritime picture in light of elevated tensions between the U.S. and Iran.
“There are clearly increased tensions in the Gulf region, with American assets now referenced, but the underlying maritime threat remains heightened with an ongoing possibility of escalation.
“The London insurance market has been operating with these strategic factors in mind since last May and underwriters will continue to ask appropriate questions of assureds in order to ascertain the risk dynamics of individual sailings seeking war-risk cover,” explains the JWC.
Industry commentary notes that some brokers in the region expect insurers to increase rates to reflect the perception of greater war risk for shipping in the Gulf. While it remains to be seen exactly how the latest escalation impacts rates in the maritime space, it’s likely that certain types of war cover for threats in the Gulf do rise, so long as conditions stay the same.