Jasem Mohamed al-Budaiwi, the Secretary General of the Gulf Cooperation Council – an organization that brings together six states in the region, including Saudi Arabia, Qatar, and the United Arab Emirates – said that Iran has imposed a toll payment for the safe passage through the Strait of Hormuz. It appears that at least part of these payments are made in yuan, the Chinese currency.
THE SITUATION IN THE STRAIT OF HORMUZ
The Strait of Hormuz – which connects the Persian Gulf to the Gulf of Oman, thus providing a link to the Arabian Sea and the Indian Ocean – is the most important waterway in the world for energy trade: under normal conditions, about one fifth of all gas and oil transported by sea pass through it every day. But since the United States and Israel started the war on Iran, the Tehran regime has effectively blocked the strait, causing a sharp rise in fossil fuel prices, and beyond. Currently, only ships flying the flags of a few countries – such as China, India, Thailand, Malaysia, and Pakistan – can cross it without risking attacks by the Iranians.
PAYMENTS IN YUAN?
Citing Iranian news agencies Fars and Tasnim, Fortune wrote that the Iranian parliament is working to formalize the procedure for collecting transit fees for ships passing through the Strait of Hormuz. “We guarantee security, and it is natural that ships and tankers pay such fees,” said MP Mohammadreza Rezaei Kouchi.
According to maritime data analysis company Lloyd’s List Intelligence, vessels wishing to cross the Strait of Hormuz must submit a series of documents about their cargo, crew members, and destination to the Revolutionary Guards, a branch of the armed forces. Lloyd’s List Intelligence describes this procedure as a “geopolitical control” and specifies that “although not all ships pay a direct toll, at least two vessels have done so and the payment was made in yuan.”
RELATIONS BETWEEN IRAN AND CHINA
Officially, China has not taken a position on the Gulf war: it has called on all parties to start peace negotiations as soon as possible and claims to maintain normal trade relations with Tehran. However, it seems to be supplying – through Smic, China’s largest semiconductor company – machinery for microchip production to the Iranian armed forces.
Beijing is the main buyer of Iranian crude oil, with a share exceeding 80 percent. Furthermore, it is heavily dependent on supplies passing through the Strait of Hormuz: 40 percent of its oil imports transit this chokepoint and roughly 30 percent of its liquefied gas imports come from Qatar and the United Arab Emirates.
For Iran, oil trade with the Chinese is crucial because it helps mitigate the impact of Western sanctions on its economy.
WHAT WILL THE UNITED STATES DO?
Meanwhile, the United States has deployed 10,000 troops in the Persian Gulf: in the coming days, another two thousand marines and thousands of soldiers from the 82nd Airborne Division are expected. President Donald Trump told the Financial Times that he wants to “seize Iranian oil” and did not rule out a landing on Kharg Island, which serves as a hub for Iran’s oil exports.
The president also stated that negotiations between Washington and Tehran – mediated by Pakistan – are progressing well, and that the Iranians will have until April 6 to accept the surrender terms set by the Americans: otherwise, bombings on the country’s energy infrastructure could be launched.
MEANWHILE, OIL…
This morning, the price of Brent crude (the international benchmark based on the North Sea) rose above $115 per barrel, while WTI (the American benchmark) surpassed $101.
The new surge in crude prices, which since early March have gained 59 percent, is linked to the widening Gulf war: over the weekend, the Houthis, a Yemeni armed group affiliated with Iran, attacked Israel, fueling fears of a blockade of maritime routes in the Red Sea as well.
