Ali Salimov, Researcher
The escalation of the US–Israel–Iran confrontation into a large-scale war in 2026 has not only generated a security crisis in the Middle East. It has also raised serious questions regarding the resilience of the petrodollar model, which has been regarded as one of the key pillars of the international economic system for the past 50 years. In my view, the issue is no longer whether the petrodollar is weakening. The central question is whether the financial order constructed by the United States continues to function in the same way as before.
For many years, the global dominance of the US dollar was ensured not only by the strength of the American economy but also through control over the energy market. Oil was traded in dollars, countries accumulated dollar reserves to purchase energy, and the resulting revenues were recycled back into US financial markets. This model granted Washington a financial advantage that no other state possessed. The United States effectively became the center of the global economy by exporting its currency.
However, in recent years, cracks in this system have become increasingly visible. The growing use of sanctions as a central instrument of US foreign policy has intensified concerns in many countries about the risks of dollar dependency. Russia, China, Iran, and a significant portion of BRICS countries have begun taking concrete steps toward establishing alternative financial mechanisms. What was once considered a theoretical concept of de-dollarization is gradually turning into an economic reality rather than a political slogan.
The Iran war has acted as one of the most significant catalysts accelerating this process. The conflict has demonstrated that global energy security still depends on a limited number of strategic chokepoints and geopolitical risk zones. The uncertainty surrounding the Strait of Hormuz has shaken international energy markets and delivered a clear message to many states: diversification is required not only in energy supply sources but also in energy payment systems.
One of the most notable developments is that an alternative to the petrodollar is already emerging. As the world’s largest energy importer, China is expanding the use of the yuan in oil and gas trade. Within BRICS, discussions on common payment mechanisms are ongoing. At the same time, the use of the dollar as a tool of political pressure in the Russia–West confrontation has pushed many countries to seek alternative pathways. In other words, the instruments used by the United States to maintain its financial dominance are paradoxically contributing to its gradual erosion.
At this point, it is important to emphasize a key issue. The weakening of the petrodollar system does not imply the imminent collapse of the US dollar. The American economy, financial markets, and global investment infrastructure remain the most powerful system in the world. Nevertheless, history shows that no form of hegemony is permanent. The British pound once occupied the center of the global financial system, yet it ceded this role to the US dollar in the mid-20th century. Today, the possibility of a similar transition involving the dollar is being discussed as a realistic scenario for the first time.
In my assessment, the Iran war will not dismantle the petrodollar system outright. However, it will accelerate an irreversible process in the global financial architecture. The world is gradually moving away from a unipolar, US-centered financial order toward a multipolar financial system. This transformation may be slow, but its direction is becoming increasingly difficult to reverse.
If the second half of the 20th century represented the rise of the petrodollar system, then 2026 may be remembered as a symbolic turning point marking its gradual erosion. The Iran war has once again demonstrated that as geopolitical risks in energy markets increase, states begin to search not only for new energy sources but also for new financial centers. This trend is likely to define the main trajectory of transformation in the international economic order over the coming decades.