The US-Iran war continues to evolve, bringing in new perspectives and changes to this ongoing conflict. In another developing story, a CNN report has shared a possibility of Iran considering passing oil tankers only when the payments are being made in the Chinese yuan, in efforts to injure the petrodollar mechanism.
Also Read: Nifty 50 Edges Higher as Brent Crude Stays Above $100 Amid Iran War
Iran’s Yuan Payment Fantasy
As per the latest CNN report, a senior Iranian supreme official told the media outlet that Iran may consider passing limited oil tankers if the payments are being made in the Chinese yuan instead of the US dollar. At present, Iran is controlling the Strait of Hormuz, considering various options for allowing ships and cargo to pass through the narrow passageway. There is speculation that Iran may request the chinese yuan rather than dollars for certain oil transactions.
This development has propelled Chinese analysts to weigh in on the downsides, urging caution in the process.
“From a technical and institutional standpoint, this arrangement is very hard to enforce, particularly in verifying that transactions are truly settled in yuan.” Said Gong Jiong, a professor of economics at the University of International Business and Economics in Beijing
Another leading analyst told SCMP how this particular action can trigger a politicized dynamic, in which countries choosing to pay in yuan may have to suffer the wrath of the US and Israel.
“This certainly supports yuan-denominated payments, but it is unlikely to be sustainable. Most global oil trades are not priced in yuan. Any country or company that complies with Iran’s requirements to transit the strait would be engaging in a politicized action. And the US and Israel would be likely to respond with politically motivated countermeasures.”
Hormuz Open To Any Country Except the US and Israel
The latest post by the Kobeissi Letter weighs in on Iran’s foreign minister’s statement on allowing the country’s oil tankers to pass Hormuz except those of Israel and the US. This would particularly lead China and India to restore 7M barrels of oil supply in a single day, shifting narratives.
“There are widespread reports on Iran allowing ‘any country aside from the US and Israel’ to pass through the Strait of Hormuz. If this is true. China and India alone will be able to restore nearly 7 million barrels of oil supply PER DAY. In other words, ~39% of the 18 million barrels per day of supply currently offline. Due to the Strait of Hormuz closure would return to the market. This would be massive news if confirmed.”
Also Read: If I Had $3,000, I’d Buy Google’s Alphabet Stock Right Now: Here’s Why