Iran proposes deal on Strait of Hormuz to Europe that could shift global financial system
Iran has offered Europe a deal concerning transit through the Strait of Hormuz, which could have profound implications for the global financial system. The strait is a route for 20% of the world’s oil, while energy prices in Europe have already surged significantly: gas prices doubled, oil increased by 60%, and diesel costs $200 per barrel.
The proposal suggests Europe would pay for energy supplies using euros or yuan, which could signal to the world that bypassing the petro-dollar is feasible. The US dollar has served as the dominant reserve currency since 1974, but its share in global reserves has fallen from 70% to 56.9% over the past 25 years.
Iran has joined BRICS, Russia has banned dollar transactions, and gold prices have reached $5500 per ounce—indicating a shift in the global balance of power and a potential weakening of the dollar’s economic role.
If Europe accepts this deal, demand for the dollar will decline, reducing reserve currency holdings and the US’s ability to fund military operations under favourable terms. This poses a serious threat to the global financial system currently built on dollar dominance.
Thus, the proposed agreement may pave the way for a major realignment in the global financial market, particularly in the energy sector, and influence international political relations.
It is expected that Europe’s forthcoming decisions on this matter may shape the trajectory of the global economy in the years to come.
