Iran Eyes Chinese Yuan-Based Oil Trade to Ease Tanker Restrictions in Strait of Hormuz

Iran is considering allowing a limited number of oil tankers to pass through the strategically vital Strait of Hormuz under a new condition: that oil shipments be traded in Chinese yuan rather than U.S. dollars, according to a source, who spoke with CNN.

The proposal comes as tensions escalate between Iran and the United States following recent military confrontations that have disrupted shipping across one of the world’s most critical energy corridors.

A source told reporters that Iranian authorities are developing a plan to manage tanker traffic through the strait, potentially permitting some vessels to pass if the cargo transactions are settled in yuan. Such a move would represent a significant shift in global oil trade practices, where most transactions are traditionally conducted in U.S. dollars.

The development follows remarks from U.S. President Donald Trump, who warned that Washington could strike Iran’s oil infrastructure on Kharg Island if Tehran continues blocking vessels from navigating the strait.

Trump also stated that U.S. forces had already destroyed key military targets on the island, which is responsible for handling roughly 90% of Iran’s crude oil exports.

The escalating confrontation has heightened concerns across energy markets, as the Strait of Hormuz carries a significant share of global oil shipments each day. Any sustained disruption threatens to ripple through international energy supply chains.

Oil prices have surged amid the uncertainty, climbing to their highest levels since mid-2022, shortly after Russian invasion of Ukraine triggered a global energy shock.

Analysts say Iran’s potential shift toward yuan-based oil transactions could signal an effort to bypass dollar-dominated financial systems, particularly under sanctions pressure.

While Russian oil exports have increasingly been settled in rubles or yuan since Western sanctions intensified, the vast majority of global oil trade still relies on dollar-denominated pricing.

International organizations warn that disruptions in shipping through the Strait of Hormuz could have consequences beyond energy markets.

United Nations officials said restrictions on maritime traffic could significantly affect humanitarian supply chains. Tom Fletcher, the UN’s Under-Secretary-General for Humanitarian Affairs, cautioned that any slowdown in vessel traffic would quickly raise the cost and difficulty of transporting essential goods worldwide.

“When ships stop moving through that strait, the consequences travel quickly,” Fletcher said, noting that the flow of food, medicine, fertilizers, and other critical supplies could be severely impacted.