In Strait of Hormuz, Iran and China take aim at US dollar hegemony | Business and Economy News | Al Jazeera

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Listen Listen (8 mins) Save Click here to share on social media share2 Share facebook twitter whatsapp copylink google Add Al Jazeera on Google info Oil tankers and cargo ships line up just outside the Strait of Hormuz, as seen from Khor Fakkan, United Arab Emirates, on March 11, 2026 [Altaf Qadri/AP] By John Power Published On 8 Apr 2026 8 Apr 2026 As the United States-Israel war on Iran — paused for two weeks on Wednesday amid fresh diplomatic talks — has roiled the global economy for more than a month, Iran and China have seized the opportunity to address a shared gripe about the global financial system. The supremacy of the dollar is especially apparent in the global oil market, where about 80 percent of transactions are settled in the currency, according to a 2023 estimate by JP Morgan Chase. In Iran’s control of the Strait of Hormuz , a conduit from the Gulf for about one-fifth of global oil and liquefied natural gas supplies, Tehran and Beijing have found a tool to boost the Chinese yuan as an alternative to the greenback. A cargo ship sits near the Strait of Hormuz, as seen from northern Ras al-Khaimah in the United Arab Emirates on March 11, 2026 [Reuters] ‘Chipping away’ at dollar dominance Even if China struggles to match the internationalisation of the dollar, it may not matter much to Tehran, said Hosuk Lee-Makiyama, director of the European Centre for International Political Economy in Brussels. “China purchases nearly all of Iran’s oil, and their trade is actually in balance since Iran can get all the machinery and industrial goods that it cannot get elsewhere,” Lee-Makiyama told Al Jazeera.

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Oil tankers and cargo ships line up just outside the Strait of Hormuz, as seen from Khor Fakkan, United Arab Emirates, on March 11, 2026 [Altaf Qadri/AP]
By
John Power
Published On 8 Apr 2026
8 Apr 2026
As the United States-Israel war on Iran — paused for two weeks on Wednesday amid fresh diplomatic talks — has
roiled the global economy
for more than a month, Iran and China have seized the opportunity to address a shared gripe about the global financial system.
Their common cause: ending the hegemony of the US dollar.
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For years, they say, Washington has leveraged the dominance of the dollar in international trade to exert influence and inflict pain on enemies and competitors, Iran and China included.
The supremacy of the dollar is especially apparent in the global oil market, where about 80 percent of transactions are settled in the currency, according to a 2023 estimate by JP Morgan Chase.
In Iran’s control of the
Strait of Hormuz
, a conduit from the Gulf for about one-fifth of global oil and liquefied natural gas supplies, Tehran and Beijing have found a tool to boost the Chinese yuan as an alternative to the greenback.
Under Iranian officials’ de facto
toll booth regime
, commercial vessels are being charged transit fees in yuan, according to multiple reports, the latest example of deepening Chinese-Iranian economic cooperation facilitated by China’s currency.
While it is unclear how many vessels have made payments in yuan, at least two had done so as of March 25, according to Lloyd’s List.
China’s Ministry of Commerce last week acknowledged the Lloyd’s List reporting in a social media post that appeared to confirm the use of yuan to settle payments.
On Saturday, Iran’s embassy in Zimbabwe said in a social media post that it was time to add the “petroyuan” to the global oil market.
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Tehran, which on Wednesday said it would guarantee safe passage in the strait for two weeks under a ceasefire deal reached with the US, and Beijing did not respond to requests for comment.
“At one level, Iran is aiming to poke its thumb in the United States’s eye, adding insult to injury,” Kenneth Rogoff, an economics professor at Harvard University and former chief economist at the International Monetary Fund (IMF), told Al Jazeera.
“At another level, Iran is dead serious about preferring yuan to avoid US sanctions and to cultivate its ally, China, which has been moving steadily to redenominate its own trade, and that of the BRICS nations into yuan,” Rogoff said.
US dollar and Chinese yuan banknotes pictured on September 12, 2025 [Dado Ruvic/Reuters]
A ‘multipolar’ financial world
For Tehran and Beijing, elevating the yuan is a win-win.
The use of the currency allows China and Iran to skirt US sanctions imposed via the dollar-dominated financial system.
It also simplifies and reduces the cost of trade between the sides, which has boomed under a 25-year “strategic partnership” signed in 2021.
“Iran clearly understands the importance of this challenge to US financial dominance as well as the vital role of the dollar system and petrodollars,” Bulent Gokay, a professor of international relations at Keele University in the United Kingdom, told Al Jazeera.
For China, Gokay said, the move aligns with Beijing’s aims of creating a “multipolar financial world where the US dollar’s central role is counterbalanced by the growing influence of emerging powers”.
China buys more than 80 percent of Iran’s oil exports, enjoying discounted rates in purchases widely believed to be facilitated in yuan.
Iran in turn imports large quantities of Chinese machinery, electronic equipment, chemicals and industrial components.
The war has done little to disrupt oil flows between the two countries, which remain similar to pre-conflict levels, according to analyses by data and analytics firms.
In the first two weeks of the conflict, Iran exported 12 million to 13.7 million barrels of crude, most of it to China, according to Kpler and TankerTrackers.
China has long harboured ambitions of challenging the primacy of the dollar.
In a speech to officials in 2024, Chinese President Xi Jinping expressed his hope that the yuan would become a common currency in international commerce and achieve “global reserve currency status”.
A key policy for Chinese President Xi Jinping is the internationalisation of the yuan  [File: Tingshu Wang/Reuters]
A mountain to climb
The yuan has made steady inroads in recent years amid the growing influence of Global Sou

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## Expert Analysis

### Merits
N/A

### Areas for Consideration
- While it is unclear how many vessels have made payments in yuan, at least two had done so as of March 25, according to Lloyd’s List.
- It also simplifies and reduces the cost of trade between the sides, which has boomed under a 25-year “strategic partnership” signed in 2021. “Iran clearly understands the importance of this challenge to US financial dominance as well as the vital role of the dollar system and petrodollars,” Bulent Gokay, a professor of international relations at Keele University in the United Kingdom, told Al Jazeera.
- Advertisement But the Chinese currency still has a steep mountain to climb if it is to pose a serious challenge to the greenback.

### Implications
- Recommended Stories list of 4 items list 1 of 4 Israeli soldiers fire tear gas at Palestinian youth during raid in Hebron list 2 of 4 Why is Iran’s Bushehr nuclear power plant being attacked? list 3 of 4 Protesters swarm US embassy in Tel Aviv, demanding end of wars list 4 of 4 Trump says US could charge for Strait of Hormuz passage amid Iran war end of list For years, they say, Washington has leveraged the dominance of the dollar in international trade to exert influence and inflict pain on enemies and competitors, Iran and China included.
- For China, Gokay said, the move aligns with Beijing’s aims of creating a “multipolar financial world where the US dollar’s central role is counterbalanced by the growing influence of emerging powers”.
- A key policy for Chinese President Xi Jinping is the internationalisation of the yuan [File: Tingshu Wang/Reuters] A mountain to climb The yuan has made steady inroads in recent years amid the growing influence of Global South economies, many of which have strained relations with Washington.
- Unlike the dollar, the yuan is not freely convertible due to Beijing’s strict capital controls, meaning that businesses and institutions cannot exchange it for other currencies or move it across borders at will.

### Expert Commentary
This article covers iran, dollar, yuan topics. Areas of concern are also raised. Readability: Flesch-Kincaid grade 0.0. Word count: 1415.