A senior Iranian official disclosed to CNN on Friday that Tehran is evaluating a plan to conditionally reopen the strategic Strait of Hormuz—provided oil trade switches to yuan-denominated settlement. The proposal directly challenges the half-century-old dollar-led pricing structure in global energy markets.
The strait has been effectively blockaded since March 1, following a large-scale joint military strike by the US and Israel against Iran on February 28. Tensions have since escalated, with Iran launching retaliatory strikes on Israel and Persian Gulf states hosting US forces, while facing continued American military attacks. The United Nations warned Friday that restricting shipping through the strait could have a “major impact” on regional humanitarian operations, urging all sides to keep the waterway open.
20 Million Barrels a Day Stuck
The Strait of Hormuz is the world’s most critical energy chokepoint, carrying about 20 million barrels of crude oil daily and handling roughly 20% of global liquefied natural gas trade. Oil prices have surged to their highest since July 2022, with WTI crude futures posting a single-week gain of more than 35%.
Yuan for Passage: De-Dollarization Meets Reality
Iran’s yuan-pricing condition touches the most sensitive nerve of global energy trade: dollar dominance. Nearly all international oil deals are denominated in dollars, and that monopoly underpins the greenback’s status as the world’s reserve currency. The only notable exception is Russian oil under Western sanctions, which has partially shifted to ruble or yuan settlement.
China has for years pushed for greater yuan use in energy trade, including launching yuan-denominated crude futures, but has never dented the dollar’s supremacy. Discussions of de-dollarization have long been confined to rival states. The current blockade—and Tehran’s condition—now puts yuan-priced oil squarely on the negotiating table.