Senior Republican lawmaker Lindsey Graham has sharply criticized Iran’s reported decision to charge transit fees in Chinese yuan for ships passing through the strategically vital Strait of Hormuz, calling it a direct challenge to the global dollar-based financial order.
Speaking on Hannity on Fox News, Graham said, “Iranians are trying to change the PETRODOLLAR to the YUAN… That needs to END,” framing Tehran’s move as a deliberate attempt to undermine US economic dominance.
Iran’s Emerging ‘Toll System’ in Hormuz
The criticism follows multiple reports that Iran’s elite military unit, the Islamic Revolutionary Guard Corps (IRGC), has established a de facto system to regulate maritime traffic through the Strait of Hormuz — a narrow waterway responsible for nearly 20% of global oil and gas transit.
Under this arrangement, ship operators seeking safe passage must reportedly:
Engage with IRGC-linked intermediaries, submit vessel and cargo details for security vetting, negotiate transit fees, typically starting at around $1 per barrel, Make payments in Chinese yuan or stablecoins
Once cleared, vessels receive authorization codes and, in some cases, naval escorts through what industry insiders are calling an “Iranian-controlled corridor.”
Iran has also been accused of favoring ships from “friendly” nations such as China and Russia, while restricting or threatening vessels linked to the United States or Israel. In certain cases, ships have reportedly been asked to temporarily change their registration or flag to qualify for passage.
Legal and Security Concerns
The legality of such tolls remains highly contested. Under international maritime law, while coastal states have jurisdiction over territorial waters, imposing fees on transit through international straits is widely viewed as unlawful.
Experts warn that compliance with the IRGC’s system could expose shipping companies to sanctions risks, particularly given the organization’s designation by the United States and its allies.
At the same time, security concerns in the region have escalated significantly. Several vessels have been damaged in recent weeks amid missile and drone activity, while insurance premiums for ships transiting the Gulf have surged.
The Petrodollar at Stake
At the heart of Graham’s criticism lies the so-called “petrodollar” system — a decades-old arrangement dating back to the 1970s under Richard Nixon — in which global oil trade has been predominantly conducted in US dollars.
This system has long ensured sustained global demand for the dollar, allowing the United States to:
Maintain lower borrowing costs, run persistent trade deficits, Exercise financial leverage through sanctions
By demanding yuan payments, Iran is effectively bypassing the dollar system — a move analysts say aligns with broader “de-dollarization” trends.
A Wider Global Shift?
Iran’s actions are not occurring in isolation. Countries including Russia and China have increasingly turned to alternative currencies for trade, particularly in response to Western sanctions.
China, in particular, has been promoting the yuan as a settlement currency in energy markets. Iran has already been selling oil to Chinese buyers in yuan for years, while Russia accelerated similar practices after Western sanctions intensified in 2022.
Even traditional US allies in the Gulf have shown signs of diversification. Saudi Arabia, for instance, has explored accepting yuan for some oil transactions and engaged in discussions within BRICS frameworks aimed at reducing dollar dependence.
Strategic Implications
For Washington, the implications are significant. Graham and other hawkish policymakers argue that allowing such practices to proliferate could weaken US geopolitical influence and embolden adversaries.
However, critics contend that the aggressive use of dollar-based sanctions has itself accelerated the global push for alternatives.
“The more the dollar is used as a geopolitical weapon, the stronger the incentive for countries to find ways around it,” one analyst noted.
Outlook: Symbolic or Structural Shift?
Despite growing concerns, most economists agree that the US dollar remains firmly entrenched as the world’s dominant reserve currency. Deep financial markets, institutional trust, and global inertia continue to favor the greenback.
However, Iran’s yuan-based transit system — if sustained — could represent a meaningful step toward a more fragmented global financial order.
For now, Graham’s warning underscores a deeper geopolitical struggle: the intersection of energy security, military power, and currency dominance in an increasingly multipolar world.
As tensions in the Strait of Hormuz persist, the question remains whether such developments are temporary wartime adaptations — or early signals of a lasting shift away from the dollar-centric system that has defined global trade for half a century.