Iran Closes Strait of Hormuz Again, Threatening Ceasefire Agreement

Apr 10, 2026

Iran reclosed the Strait of Hormuz to commercial shipping within hours of announcing a two-week ceasefire with the United States and Israel on April 8, 2026, imposing transit fees payable in Chinese yuan. At least two vessels had made yuan payments by March 25, 2026, according to Lloyd's List, with China's Ministry of Commerce appearing to confirm the arrangement. The toll system allows China and Iran to circumvent US sanctions while advancing yuan internationalization, though the currency remains limited with only 3.7 percent of cross-border trade settled in yuan in 2024 compared to the dollar's 57 percent share of global foreign exchange reserves. The closure threatens the fragile ceasefire and disrupts a waterway that carries one-fifth of global oil and liquefied natural gas supplies, prolonging economic turmoil from a conflict that has lasted more than a month.

Iran and China using yuan for Strait of Hormuz transit fees

▪At least two vessels had made transit payments in yuan as of March 25, 2026, according to Lloyd's List.

Strategic motivations behind challenging dollar dominance

▪Chinese President Xi Jinping expressed hope in a 2024 speech that the yuan would become a common currency in international commerce and achieve global reserve currency status.
▪About 80 percent of global oil market transactions are settled in US dollars, according to a 2023 estimate by JP Morgan Chase.
▪Iran exported 12 million to 13.7 million barrels of crude in the first two weeks of the conflict, most of it to China.
▪China and Iran signed a 25-year strategic partnership in 2021.

Obstacles to yuan replacing the dollar globally

▪All Gulf states have priced their oil in dollars since the 1970s when Saudi Arabia agreed to exclusively use the currency in exchange for US security guarantees.
▪Only 3.7 percent of cross-border trade was settled in yuan in 2024, up from less than 1 percent in 2012.
▪The US dollar accounted for 57 percent of central banks' foreign exchange reserves worldwide in 2025, compared to about 20 percent for the euro and 2 percent for the yuan.

Long-term implications for US financial hegemony

▪The United States-Israel war on Iran has roiled the global economy for more than a month as of April 8, 2026.
▪The United States-Israel war on Iran was paused for two weeks on Wednesday, April 8, 2026, amid fresh diplomatic talks.