Iran Conflict Could Accelerate Shift From Dollar to Yuan in Oil Trade

War Risks Challenge the Petrodollar System

Strategists at Deutsche Bank warn that escalating conflict involving Iran could weaken the long-standing dominance of the U.S. dollar in global oil markets. The bank noted that disruption to shipments through the Strait of Hormuz and Tehran’s reported requirement for oil payments in Chinese currency may accelerate the emergence of a “petro-yuan.”

Mallika Sachdeva, a strategist at Deutsche Bank, said the conflict could act as a catalyst for erosion of the petrodollar system, which has underpinned global trade for decades. China, already the largest buyer of Iranian oil, has expanded efforts to promote the Chinese yuan in cross-border energy settlements.

Historical Pressure on Dollar-Based Oil Trade

The petrodollar system dates back to 1974, when Saudi Arabia agreed to price oil in U.S. dollars in exchange for security guarantees from United States. Analysts note rising trade between Gulf producers and Asian economies, alongside new payment tools such as the mBridge blockchain platform, could further challenge dollar dominance in global energy transactions.

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