The Petrodollar is losing authority

XBR/USD

Key zone: 105.00 - 108.00

Buy: 108.50 (on a pullback following a retest of 106.50); target 110.50-112.50; StopLoss 107.80

Sell: 104.50 (against a strong negative fundamental backdrop); target 102.50-100.00; StopLoss 105.20

The global oil trading system, which for decades relied on the dominance of the U.S. dollar, is facing critical challenges amid the conflict with Iran and the blockade of the Strait of Hormuz. The largest importing countries are increasingly developing less transparent interaction schemes with Tehran and the Persian Gulf states, seeking to guarantee uninterrupted commodity supplies.

Reminder:

The modern oil trading model was formed in the 1970s–1980s as a mechanism to prevent market fragmentation and abandon unstable pricing determined by individual producers. Futures markets in New York and London played a key role in ensuring transparency and liquidity.

• The dominance of the petrodollar provided the United States with exceptional influence over the global economy, offering a tool of sanctions-based (political and financial) pressure that enables restrictions on access to international trade for countries, companies, and private individuals.
• Washington has actively used sanctions mechanisms against Iran, Venezuela, Russia, and China to pursue geopolitical and economic objectives.
• Concerns about falling under U.S. secondary sanctions are forcing major emerging economies to seek alternative settlement schemes that bypass the dollar and Western logistics infrastructure. So far, the scale of these processes remains limited: according to estimates, only 10–20% of global oil trade is conducted in currencies other than the U.S. dollar.

After February 28, logistical disruptions effectively removed about 25% of Persian Gulf supplies from the global market. The impact has been especially severe for Asian countries, which depend on energy imports from this region for approximately 60% of their needs.

The blockade of the Strait of Hormuz has now continued for 13 weeks. In response, the largest importers are adapting supply chains by concluding direct agreements with Persian Gulf exporters to ensure stable deliveries of oil, chemical products, and fertilizers.

A notable example is the India–UAE agreement signed in 2023, which provides for settlements in rupees and dirhams instead of dollars. Last Friday, Indian Prime Minister Narendra Modi once again visited Abu Dhabi to discuss long-term supply contracts and the expansion of strategic reserves.

At the same time, the market is facing growing business opacity. In recent days, several oil tankers passed through the Strait of Hormuz with tracking systems switched off, avoiding detection. The structure of such agreements — both official and informal — remains closed. It is likely that some contracts are denominated in alternative currencies, while others rely on barter mechanisms. Cryptocurrency settlement options also remain on the agenda.

Regardless of whether such deals include transit payments benefiting Tehran — which is officially denied for now — this model increases Iran’s de facto influence over cargo movements through this strategic route.

What does this mean in the end?

• Supply disruptions from the Middle East have strengthened the position of the United States as the world’s largest producer of oil and gas, allowing Washington to maintain a dominant role in the global economy over the long term. A scenario of the dollar being fully replaced by an alternative currency remains unlikely for now.
• The market needs new pricing mechanisms capable of reducing the impact of political risks and ensuring supply stability through the Strait of Hormuz.
• Given that Asia consumes more than 30% of global oil and imports over half of the required volume, the strengthening of bilateral energy agreements may accelerate the fragmentation of the global energy market.
• The consequences of the conflict with Iran increase the risks of erosion in the unified oil pricing system, reduced transparency of trade flows, and weakening U.S. control over the financial infrastructure of global oil trade.

This gives speculators new room for transactions. Stay alert!

So we act wisely and avoid unnecessary risks.

Profits to y’all!