March 11 (Reuters) - Insurance giant Chubb will

be the lead partner on the U.S. International Development

Finance Corporation's $20 billion Maritime Reinsurance Plan

aimed at resuming commercial shipping in the Gulf, the agency

said on Wednesday.

The U.S.-Israeli conflict has widened sharply in recent days

and paralyzed shipping traffic through the Strait of Hormuz, a

major global chokepoint in the Gulf.

Iran said the world should be prepared for oil to hit $200

a barrel as its forces attacked merchant ships on Wednesday in

the blockaded Gulf. Meanwhile, U.S. President Donald Trump has

repeatedly tried to reassure markets this week that the campaign

will end soon.

So far there has been no let-up on the ground and no sign

ships can safely pass through the Strait of Hormuz, where about

a fifth of the world's oil passes, raising the risk of the worst

disruption to energy supplies since the oil shocks of the 1970s.

Maritime insurance covers ships and cargo against risks such

as accidents, piracy or conflict, with shipowners paying

premiums that rise as insurers assess the likelihood of losses.

War risk coverage is typically excluded from standard

policies and must be purchased separately, often at sharply

higher premiums for vessels sailing through conflict zones.

Without such coverage, ships and cargo worth hundreds of

millions of dollars would be exposed to losses from attacks or

seizures, leaving owners and financiers vulnerable and deterring

vessels from sailing through such waters.

The DFC said its reinsurance facility will insure losses up

to roughly $20 billion on a rolling basis and insurance will

initially focus on hull and cargo. 

"Together, DFC and Chubb have identified several American

insurance companies to provide reinsurance policies behind Chubb

and alongside DFC to expand market capacity," the agency added.