【Could the Iran War Trigger a Triple Blow to Oil, Dollar, and Security?】War is a mirror that reveals more truths—such as the credibility of the U.S. dollar.
After World War II, there emerged a "triangle pact" among oil, the dollar, and security.
This year may well become a landmark year in financial history: an American midterm election year, facing imported inflation and political infighting, now plunged into an Iran war, triggering a surge in oil prices, shaking the credibility of U.S. hegemony and its carrier—the dollar—and sparking a geopolitical, economic, and security restructuring unseen for decades worldwide.
The profound implications of the Strait of Hormuz dilemma may still be underappreciated at present.
Trump’s ability to safeguard key maritime routes will be interpreted through the lenses of oil prices, the dollar, and security.
If this capability is absent, America’s global promise as an energy security guarantor would effectively be bankrupt.
High oil prices will evolve from a mere cost issue into a killer undermining the global standing of the dollar.
IMF data shows that the share of the dollar in global official foreign exchange reserves has fallen to around 57%, the lowest level in nearly 30 years.
In contrast, central banks worldwide are accumulating gold at a historic pace, with their total reserve value now exceeding the amount of U.S. Treasury bonds held by foreign entities for the first time.
This shift in stock reveals one clear trend: de-dollarization.
The dollar’s dominant position in international currency reserves is no longer unchallenged.
In Saudi Arabia’s oil exports to China, the proportion settled in renminbi has noticeably increased.
Similarly, UAE and India are increasingly adopting local-currency settlement—these are becoming standard practice.
The pound didn’t collapse overnight, nor will the dollar.
Nothing is “too big to fail.”
The linkage between oil and the dollar is not inevitable. Marginal changes in settlement currencies may have a greater psychological impact on global finance than the gradual decline in reserve shares. Such shifts could lead to a sustained drop in marginal demand for dollar assets, eroding America’s ability to issue low-cost government bonds.
This creates a negative feedback loop between finance and geopolitics: damage to hegemonic credibility accelerates de-dollarization, while de-dollarization, in turn, undermines the fiscal and financial foundations of hegemony—potentially even gradually dismantling the financial pillar of America’s global strategy!
When oil is no longer automatically tied to the dollar, and when the Middle East—even Europe—no longer blindly trusts America’s security guarantee, the so-called “Pax Americana” established after WWII becomes nothing more than a speculative gamble.
From soft power to hard power, the U.S. is undergoing a severe test: a triple blow to oil, the dollar, and security.
Original: toutiao.com/article/1864428951491600/
Disclaimer: The views expressed in this article are those of the author alone.