In the Strait of Hormuz, Iran and China Unite to Reduce the Dollar's Influence

REPUBLIKA.CO.ID, TEHERAN – With the temporary two-week halt in the United States-Israel war, Iran and China have utilised this opportunity to discuss joint complaints about the global financial system. Their shared goal, as reported by Al Jazeera, is to end the hegemony of the US dollar.

For years, they claim, Washington has exploited the dollar’s dominance in international trade to exert influence and cause harm to enemies and competitors, including Iran and China.

The dollar’s supremacy is particularly evident in the global oil market, where approximately 80 per cent of transactions are settled in that currency, according to 2023 estimates from JP Morgan Chase.

In Iran’s control over the Strait of Hormuz, a route from the Gulf that controls around one-fifth of global oil and liquefied natural gas supplies, Tehran and Beijing have found a tool to increase the use of the Chinese yuan as an alternative to the US dollar.

According to several reports, under the de facto toll regime imposed by Iranian officials, commercial ships are charged transit fees in yuan.

Although it is unclear how many ships have made payments in yuan, at least two ships have done so on 25 March, according to Lloyd’s List.

China’s Ministry of Commerce acknowledged Lloyd’s List reports last week in a social media post that appears to confirm the use of yuan for settling payments.