Three major energy exporters are quietly but steadily moving their trade settlements into the Chinese yuan, a development that analysts say could gradually reshape global commodity markets and test the dollar’s decades-long supremacy.
The shift gained urgency on February 28, 2026, when Iran closed the Strait of Hormuz amid escalating conflict and began demanding transit fees in yuan or cryptocurrency.
Tehran had been largely cut off from dollar-based banking since U.S. sanctions were reimposed in 2018, making the yuan a practical alternative. The move caught regional buyers off guard, including Japan, which reportedly complied with the new payment terms.
By March 2026, the ripple effects were visible in China’s payment systems. CIPS, the country’s alternative to SWIFT, processed 1.46 trillion yuan in trade settlements that month, a 50% jump from February and three times the volume recorded in March 2021. The system hit an intraday peak of 1.22 trillion yuan on April 8, according to people familiar with the matter.
Saudi Arabia’s involvement marks a more significant turning point. In March, the kingdom’s share of oil transactions settled in yuan reached 41%, a sharp rise from negligible levels two years earlier. Two Saudi state-owned banks formally joined CIPS during the same month.
The shift comes after Riyadh’s 50-year security-for-oil arrangement with Washington, which informally expired in June 2024, was not renewed. Commercial logic now favors Beijing—Saudi crude shipments to China are more than four times those to the United States.
Russia has moved even more decisively. Following the 2022 SWIFT expulsions after its invasion of Ukraine, Moscow quickly rerouted energy payments into yuan.
By July 2026, Prime Minister Mikhail Mishustin confirmed that more than 90% of Russia-China trade was being settled in rubles and yuan, with some sectors seeing that figure exceed 99%.
Russia’s central bank data shows the yuan overtook the dollar as the most traded foreign currency on the Moscow Exchange in early 2026.
Despite these milestones, the yuan remains a minor player globally. SWIFT data for March 2026 shows the currency accounting for just 3% of international payments, compared with the dollar’s 51%. The dollar’s share of global reserves stood at 56.8% at the end of 2025, down from about 71% two decades ago, though much of that decline is attributed to valuation shifts rather than deliberate diversification.
For businesses, the landscape is becoming more complex. Deutsche Bank analysts have cautioned that Middle East instability could gradually erode the petrodollar system over time, particularly as 85% of the region’s oil now flows to Asian buyers.
In April 2026, South Korea’s finance ministry clarified that importing Russian oil products using yuan, rubles, or dirhams carries no sanctions risk, opening new payment corridors.
The yuan’s international infrastructure continues to expand. CIPS now counts over 1,700 financial institutions across more than 100 countries. The digital yuan pilot program has been extended to cross-border transactions with Saudi Arabia and the UAE, and the mBridge platform, where digital yuan accounts for over 95% of activity, is gaining adoption. BRICS members are also expected to unveil a new payment framework later this year.
“We are witnessing a structural realignment, but it will take decades,” said Toru Nishihama, chief economist at Dai-ichi Life Research Institute. “The yuan’s share is rising, and the movement away from the dollar will gradually accelerate. But the dollar’s dominance is not about to end overnight.”
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