KARACHI: Iran has signaled it may condition traffic through the Strait of Hormuz — one of the world’s most vital energy corridors — on oil sales denominated in Chinese yuan. The move underscores Tehran’s bid to reduce reliance on the US dollar and deepen economic alignment with Beijing.
A senior Iranian official told CNN that only a limited number of tankers would be permitted, raising concerns over potential supply disruptions. The Strait of Hormuz handles nearly a fifth of global oil trade, and any conditioning of passage could ripple across energy markets.
Analysts warn the policy could strike at the heart of the petrodollar system, which has long underpinned US financial dominance by ensuring oil is traded in dollars. If Iran’s experiment gains traction, it could accelerate a shift toward alternative currencies, weakening the dollar’s global grip.
For weaker economies, analysts believe the implications are stark. Nations already struggling with dollar shortages may be forced to pivot toward yuan-based trade, deepening dependence on China’s financial system. This could leave them with fewer options, especially if Western sanctions limit access to dollar liquidity.
The development also comes as former US president Donald Trump has faced criticism for his policy reversal on Russian oil, allowing nations to buy despite earlier sanctions. Observers note that Tehran’s yuan gambit could be seen as further undermining Washington’s credibility, with rivals mocking the inconsistency of US positions.
Strategically, analysts debate whether this is a win for China or Russia. China gains by expanding yuan’s role in global energy trade, while Russia benefits from any weakening of dollar dominance. For the US and Israel, however, the calculus is less favorable: Washington risks erosion of its financial leverage, while Tel Aviv faces the prospect of a more emboldened Iran aligning with Beijing and Moscow, analysts added.
