Iran is in discussions with eight countries outside the Middle East to permit safe passage through the Strait of Hormuz for oil tankers if the cargo is traded in Chinese yuan. A senior Iranian security source disclosed this development to CNN on March 17, 2026, as Tehran seeks to manage traffic through the strategic waterway amid an ongoing blockade.

The Strait of Hormuz, which normally handles about 20 million barrels of oil per day or roughly 20% of global supply, has been effectively closed since March 1 following U.S. and Israeli attacks on Iran that began on February 28. Those strikes killed around 1,300 people, including then-Supreme Leader Ayatollah Ali Khamenei. Iran's new supreme leader, Mojtaba Khamenei, vowed to maintain the blockade as leverage. Despite the restrictions, Iran has continued exporting 1.1 to 1.5 million barrels per day to China, its largest customer, through the strait.

The proposal marks a potential shift from the traditional U.S. dollar dominance in global oil trade, known as the petrodollar system established in the 1970s. By conditioning passage on yuan settlements, Iran aims to bypass U.S. sanctions, which rely on dollar-clearing channels for enforcement. This move could accelerate de-dollarization trends seen in Russia-China energy deals priced in yuan and broader BRICS discussions on alternative payments.

Ships from countries like Pakistan and India have navigated the strait under Iranian approval using a coastal route, indicating selective access already in place. The plan extends this to yuan-denominated cargoes, rewarding allies like China while challenging Western financial leverage.

Chinese analysts have reacted cautiously, citing operational challenges, security risks, and potential strain on Beijing's ties with the U.S. Wang Yiwei from Renmin University noted it could draw China into geopolitical tensions, while an anonymous diplomatic expert highlighted that most global oil remains dollar-priced. Oil prices have surged to levels not seen since mid-2022, reflecting fears of prolonged disruption.

U.S. efforts to reopen the strait militarily face risks, and Washington's pressure on China to assist underscores the waterway's centrality to global energy security. As negotiations continue, the yuan-for-passage idea positions the strait as a battleground for currency supremacy.