Geopolitical tensions in the Middle East region are now entering a new, more challenging phase when Iran is reported to be considering drastic measures to manage traffic flow in the Strait of Hormuz.
Based on international media reports citing senior Iranian officials on March 14, 2026, Tehran is studying a plan to allow a limited number of oil tankers to pass through the strategic route with the main condition that all oil cargo transactions must be carried out using the Chinese Yuan currency.
This move is seen as a two-pronged strategy by Tehran in the face of economic and military pressure.
Since early March 2026, the Strait of Hormuz has reportedly been de facto "closed" to ships from the United States, Israel, and their Western allies following air strikes on Iranian military facilities in late February.
By imposing conditions on the use of the Yuan, Iran is not only trying to ensure the continuity of its oil exports to China, but is also directly challenging the dominance of the US Dollar in the global energy market.
The importance of the Strait of Hormuz cannot be underestimated as it is a major energy artery of the world that handles around 20 million barrels of oil per day, equivalent to about 20 percent of global petroleum liquids supply.
In addition, almost 20 percent of the world's liquefied natural gas (LNG) trade also passes through this narrow passage.
Any disruption or change in transit conditions here would have a rapid domino effect on world crude oil prices, which are now reported to have surged to their highest level since July 2022.
For Beijing, this Iranian proposal is in line with their long-term goal of internationalizing the Yuan.
While the US Dollar remains the world's main reserve currency, China has been working for years to expand the use of the Yuan in oil transactions, especially with partners like Russia, which now heavily uses the Yuan due to Western sanctions.
If Iran's terms are adopted by other energy importers, it would create a bipolar oil market where one flow uses the Yuan through Hormuz, while the other flow uses the Dollar, with much higher transportation and insurance costs due to having to take alternative, longer routes.
The United Nations (UN) has warned that continued blockades or drastic changes in the management of the Strait of Hormuz could cripple humanitarian operations and cause the cost of basic goods such as food and fertilizer to skyrocket.
However, for Tehran, the use of the Yuan is not just an economic issue, but a financial weapon to mitigate the impact of US sanctions. For now, only Chinese ships and a handful of ships from countries with special permission such as Turkey and India have reportedly successfully passed through the strait under Iranian naval surveillance.
