The escalating confrontation between the US and Iran in the Middle East is shaking the foundations of global energy markets and traditional oil trading structures. Rapid military movements in the region have triggered a surge in oil prices and led to a partial halt in crude flows through the Strait of Hormuz—a critical chokepoint for the world’s petroleum supply.
Jolts in Oil Trade and Surging Prices
Shipments through the Strait of Hormuz have effectively stopped, disrupting nearly 20% of global oil supply. The price of West Texas Intermediate crude has climbed to $97.20 per barrel, representing a 3.4% jump within a single day. Industry analysts warn that continued conflict could drive prices as high as $150 per barrel. Qatar’s energy minister cautioned that ongoing clashes in the Middle East could halt Gulf oil production within weeks, posing serious threats to the global economy.
At the same time, reports indicate that the United States is deploying additional military forces to the region and is actively considering potential ground operations in Iran. This heightened risk environment is deepening economic uncertainty and rattling markets worldwide.
Beyond the immediate military clashes, another development attracting attention is the potential reconfiguration of how— and in which currency— global oil trade is conducted.
Moves Toward Oil Trade in Yuan
Iran has reportedly engaged in talks with several major oil-importing nations, including Japan, proposing limited tanker transit through the Strait of Hormuz in exchange for conducting transactions in China’s currency, the yuan. If implemented, this mechanism may allow countries to sidestep the US financial system and continue importing energy under current restrictions.
For decades, the global oil market has revolved around the US dollar-based petrodollar system. If key importers accept payments in yuan, it could spark a fundamental shift away from this order and mark the start of a new era in energy finance.
Such a move would position China as the clear beneficiary. Settling energy transactions in yuan would not only increase Beijing’s influence over oil pricing and payment systems but also bolster its leverage in global energy diplomacy.
The possible rollout of this new model could result in preferential supply routes or privileged trading blocs for certain countries. However, nations more closely aligned with US policy are likely to remain wary, paving the way for a fragmented, dual-track structure in the global oil market.
Warfare’s Deepening Impact and Debates on a New Financial Order
Although the idea of trading oil in yuan has sparked considerable interest, military developments remain the primary driver of short-term price volatility. Iranian strikes against energy infrastructure in Qatar, Kuwait, and Bahrain are causing mounting disruption in the region. Iran has also threatened that, in the event of a US counterattack, it could target the desalination facilities that supply most of Kuwait and Saudi Arabia’s drinking water.
Meanwhile, rocket barrages against Israeli cities and ongoing retaliatory actions heighten the risk of the conflict spreading further across the region. According to Reuters, Iranian ballistic missile strikes have left numerous casualties, including children.
US President Donald Trump has given Iran a 48-hour ultimatum to reopen the Strait of Hormuz, threatening to target Iran’s energy infrastructure if the demand is not met. The combination of mounting tensions and emerging currency alternatives in trade is being seen as an unprecedented turning point for global energy dynamics.
