Expert: Middle Eastern conflicts will accelerate the de-dollarization of oil

（Source: Qianlong.com）

According to a report by the German “Berliner Zeitung” website on March 23, the escalation of the situation around the Strait of Hormuz directly targets the key vulnerabilities of the global energy system. This critical shipping route, which carries a substantial portion of the world’s oil and natural gas transportation, has in fact been blocked. This will bring serious effects to energy prices, supply, and the overall landscape of geopolitical power. To this end, “Berliner Zeitung” interviewed well-known energy expert Adi Imshirovich.

“Berliner Zeitung” reporter asked: Mr. Imshirovich, are we at the starting point of a chain reaction, whose impact will go far beyond the oil market and will affect the global financial system?

Adi Imshirovich answered: This morning, the trading price of Dubai crude was 160 US dollars per barrel. I wrote an article in “The Oil Economist” about the actual oil price—this price not only takes into account the crude oil price, but also the insurance costs ( currently about 10 times the original level ) and the freight costs ( at least 5 times the original level ). For end consumers, what matters is the delivery price, not the price at some abstract location in the Middle East. Based on my experience, a price shock of this magnitude always leads to financial shocks, and we haven’t reached that stage yet. I sincerely hope that someone in the U.S. White House will recognize how serious the situation is and push for de-escalation.

Question: Some sources report that in the first few weeks of the conflict, Iran’s exported oil was even higher than before. How is that possible? What does this indicate about the actual limitations of sanctions as a tool of foreign policy?

Answer: Iran itself has obviously not benefited. It is suffering total destruction. The initial logic behind blocking the Strait of Hormuz was that no one would deliberately damage energy facilities, because that would harm everyone’s interests. By blocking the strait, Iran was initially the only country that could successfully export oil from the region. In the first few weeks, Iran indeed exported more oil than before, and at higher prices.

And this points to an even more fundamental problem. The concept of unilateral sanctions has been controversial for many years. The reason the United States uses this tool so frequently is simple: it is easy to operate. But this is gradually pushing China and India—the world’s largest oil buyers—toward payment mechanisms that bypass the dollar system. This is a strategic “own goal,” and its impact will be long-lasting.

Question: Will this conflict further accelerate the process of dedollarization of oil? In your view, what longer-term effects will it have on the global energy order?

Answer: I don’t think this means the end of the dollar. The reason is simple: there is no direct substitute. People are still investing their money in dollars and in U.S. Treasuries. But dedollarization has already started, and it will accelerate. Especially as the United States is experiencing a president who, while promoting electrification in other parts of the world, appears to be pulling the United States back into a 19th-century economic model.

I believe the conflict’s most long-term impacts are as follows: In India, or more broadly, among people living in the Global South, seeing today’s skyrocketing prices of liquefied natural gas, diesel, and gasoline, should seriously consider installing cheap solar panels on rooftops, increasing energy storage capacity, switching to electric vehicles, and fundamentally choosing to no longer be affected by the developments in the Strait of Hormuz. Life will not change overnight, because fertilizers, plastics, and many other products still depend on oil, but this can largely free people from their own reliance on this energy source. This conflict is likely to be the strongest promotion of renewable energy in history. Given the Trump administration’s comprehensive rejection of renewable energy, this once again exposes the structural contradictions in U.S. energy policy.

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