- Continued conflict in the Middle East will limit the UAE’s access to US dollars.
- Due to lack of liquidity The UAE may switch to settlements in Chinese yuan.
The United Arab Emirates has expressed concern to the United States about a potential dollar shortage if the Middle East conflict drags on. They warn that they may turn to alternative currencies, such as the Chinese yuan, for oil transactions.
Meanwhile, Iran is already moving in this direction – it accepts yuan, and possibly even bitcoins to ensure access to shipping through the Strait of Hormuz.
According to communication According to the Wall Street Journal, UAE officials recently held talks in Washington with Treasury Secretary Scott Bessent and other US financial officials. The discussions focused on the possibility of creating a currency swap, a mechanism that would allow the UAE to quickly access US dollars in the event of a liquidity shortage.
The proposal is still in its early stages. UAE Central Bank Governor Khaled Mohamed Balama described it as a precautionary measure rather than an urgent matter. However, the nature of the negotiations suggests the country is preparing for a worst-case scenario.
The UAE has so far avoided significant economic damage from the conflict. However, officials have warned that prolonged disruptions could weaken its position as a global financial center, deplete its foreign exchange reserves, and discourage investors.
The main concern is the disruption of oil exports. The conflict has damaged part of the UAE’s oil and gas infrastructure and restricted tanker traffic through the Strait of Hormuz.
This has reduced the country’s ability to earn dollars, which play a central role in global oil transactions. The UAE dirham is also pegged to the US dollar, making stable access to the US dollar critical to maintaining economic stability.
Officials warned that if access to the dollar becomes restricted, the UAE could be forced to conduct oil sales and other transactions in alternative currencies, such as the Chinese yuan. This move would challenge the US dollar’s long-standing dominance in global oil markets.
While the UAE is only just preparing for possible exchange rate changes, Iran has already done so. Since mid-March 2026, Iran’s Islamic Revolutionary Guard Corps has been charging ships up to $2 million in Chinese yuan and Bitcoin for transit through the Strait of Hormuz.
The cost ranges from approximately $0,50 to $1 per barrel, meaning a fully loaded supertanker carrying approximately 2 million barrels could pay around $2 million for transit. Vessel operators are required to provide cargo information, after which they are given a short period of payment.
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