- Iran may allow limited oil tanker passage if oil is traded in Chinese yuan, CNN reported
- The Strait of Hormuz handles 20 per cent of global oil shipments
- UN warned shipping restrictions could affect food and medicine supplies
Iran is reportedly considering a new approach to manage oil tanker traffic through the Strait of Hormuz, one of the world's most critical energy routes. According to a senior official who spoke to CNN, Iran may allow a limited number of oil tankers to pass through the strait, but only if the oil cargo is traded in Chinese yuan.
The official told CNN that the Islamic Republic is developing a new strategy to control how oil shipments move through the vital waterway, which is responsible for transiting 20 per cent of global oil shipments.
Global oil transactions are usually conducted in US dollars. The only major exception involves Russian oil under sanctions, which is often traded in roubles or Chinese yuan. Iran War Live Updates
The Strait of Hormuz is a key channel for the world's oil supply. Market fears linked to the strait have pushed oil prices to their highest level since July 2022, the period shortly after Russia invaded Ukraine.
The United Nations has warned that any restrictions on shipping through the strait could have serious humanitarian consequences. Tom Fletcher, the United Nations' under-secretary-general for humanitarian affairs, highlighted the risks on Friday. “When ships stop moving through that Strait, the consequences travel fast. Food, medicine, fertiliser, and other supplies become harder to move and more expensive to deliver,” Fletcher said.
China maintains friendly relations with Iran and depends heavily on energy supplies from the Middle East. The world's second-largest economy receives about 45 per cent of its oil through the Strait of Hormuz, making the route particularly important for its energy security.
The situation escalated earlier when President Donald Trump said the United States had heavily bombed military targets near Iran's oil hub on Kharg Island. He also said that the US Navy would soon begin escorting oil tankers through the Strait of Hormuz.
Earlier, Axios reported, citing Trump administration officials, that capturing Kharg Island was being considered as the conflict in the Middle East continues.
Kharg Island lies around 30 kilometres (19 miles) from Iran's mainland and plays a crucial role in the country's oil industry. The island handles roughly 90 per cent of Iran's crude oil exports, making it one of the backbones of Iran's energy infrastructure.
