The Strait, the Dollar, and the Quiet Shift Reshaping Global Power

By Benadeta Mwaura - Reporter

Kenya, April 6 ,2026 - There is something strangely calm about how the world is reacting to what should, by all economic logic, be a full-blown panic.

Roughly 20 percent of global oil supply, about 20 million barrels per day, flows through the Strait of Hormuz. It is the single most important oil chokepoint on the planet. When it is threatened, markets usually convulse, governments intervene, and headlines scream crisis.

This time, the response has been… measured. Almost muted.

But beneath that calm, something far more consequential is unfolding, not just a disruption of oil supply, but a quiet test of the global financial system itself.

At the center of that system lies something rarely discussed outside policy circles: the petrodollar.

The Petrodollar: The Invisible Engine of Global Power#

To understand what is at stake, you have to start here. The petrodollar system is the backbone of modern global trade. Since the 1970s, oil, the world’s most critical commodity, has been priced and traded almost exclusively in US dollars. That simple rule has massive consequences. If you are Kenya importing oil, or India, or even China, you cannot just pay in your local currency. You must first acquire US dollars.

This creates a constant, global demand for the dollar. Today, over 80 percent of global oil transactions are still settled in dollars, and nearly 60 percent of global foreign exchange reserves are held in dollars. That demand allows the United States to borrow more cheaply, run larger deficits, and wield financial sanctions as a geopolitical weapon. The United States today is carrying a national debt of over $34 trillion, a figure that would be unsustainable for most economies, but remains manageable largely because of the dollar’s unique position in the global system.

The world needs dollars, especially to buy oil, and that demand feeds directly into sustained appetite for US Treasury bonds, keeping borrowing costs relatively low. The dollar’s dominance as the primary global reserve currency reinforces this cycle, effectively allowing the US to finance its deficits on terms no other country enjoys. But this balance is not guaranteed.

If even a fraction of global oil trade begins shifting away from the dollar, as countries within the BRICS bloc are increasingly attempting, then demand for the currency could weaken. And once demand weakens, the consequences follow: borrowing for the United States becomes more expensive, debt becomes harder to manage, and the very foundation that has supported that $34 trillion burden begins to shift. This is why the petrodollar is not just about oil markets, it is about how the United States finances its entire economic system. This is why the dollar is not just a currency, it is infrastructure. And that is exactly what is now being tested.

Enter BRICS: A Slow Challenge That Suddenly Matters#

For years, the BRICS bloc, led by countries like China, Russia, and India, has been quietly working toward a world where trade does not depend on the US dollar. It sounded ambitious. Even unrealistic. Until now. What BRICS is attempting is not dramatic, but structural. It is pushing for:

Trade settled in local currencies like yuan, rupees, and rubles
Alternative payment systems outside Western-controlled networks like SWIFT
Reduced exposure to US sanctions and financial oversight

This shift has been gradual. Fragmented. Easy to ignore. But the current crisis has given it momentum. The Strait of Hormuz Is No Longer Just Geography. What is happening in the Strait is not a traditional blockade. It is something more strategic. Oil is not fully stopped, but it is no longer neutral. Reports suggest selective access: some shipments move, others face delays, rerouting, or uncertainty.

The result is a 10–15 percent disruption in global supply, pushing prices toward $120–$150 per barrel. But the real shift is not in how much oil is flowing.

It is in how that oil is being paid for. There are growing indications that oil transactions linked to Iran are increasingly being settled in Chinese yuan and other non-dollar currencies, often routed through alternative financial systems.

This is subtle, but it is historic. Because the moment oil can be reliably traded without dollars, the logic of the petrodollar begins to weaken.

The “BRICS Effect”: A Quiet Structural Shift#

What we are witnessing is what can be called the “BRICS effect” not a single event, but a three-stage transition. First comes currency diversification. Countries begin settling trade in alternative currencies. Russia has already sold oil to India in rupees, while China has expanded yuan-based energy trade. Second is the rise of parallel financial systems. Alternatives to SWIFT are emerging, allowing countries to transact outside Western oversight. This reduces the effectiveness of sanctions, one of the US dollar’s most powerful tools. Third is energy market fragmentation. Oil begins to be priced differently across regions, in different currencies.

Why the Silence?#

If this shift is so significant, why is it not dominating global headlines? Partly because the system has not yet broken. The dollar still dominates. Markets still rely on it. Institutions are still built around it. But there is also something more strategic at play. Financial systems run on confidence. The moment investors believe the dollar is losing its dominance, they may accelerate that shift themselves.

Acknowledging the transition too early could trigger the very instability policymakers are trying to avoid. So the conversation remains cautious. Even as the ground shifts beneath it.

Can the Dollar Lose Control of Oil?#

Not overnight. But it does not need to. Even a 20–30 percent shift of global oil trade into non-dollar currencies would have profound consequences. Demand for the dollar would weaken. US borrowing costs would rise. The reach of financial sanctions would shrink.

The world would not abandon the dollar. It would simply stop depending on it. And that is a very different kind of power.

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Where the United States Stands#

The United States remains one of the world’s largest oil producers. But production is not control. Oil is globally priced. Supply chains are interconnected. A shock in the Gulf affects prices everywhere, including in the US. This is why Washington is now exploring alternative supply relationships, including renewed engagement with producers like Venezuela. It is not just about supply. It is about stabilising a system that is beginning to shift.

Africa, Caught in the Middle of a Systemic Shift#

For Africa, this is where the story becomes urgent. In the short term, the impact is immediate and painful. Higher oil prices mean higher transport costs, rising inflation and pressure on already weak currencies. Countries like Kenya, East Africa, and even oil producers like Nigeria remain deeply exposed due to import dependence, dollar-denominated debt and limited refining capacity.

But the long-term implications are more complex. If the petrodollar weakens, Africa could gain flexibility, trading in yuan or local currencies, reducing the need to hold large dollar reserves. Or it could simply shift its dependency, from Washington to Beijing.

The question is not whether power is changing. It is whether Africa will have any control over that change.

So Where Are We, Really?#

We are not in collapse. But we are no longer in stability. We are in transition. The Strait of Hormuz is no longer just a shipping route. It is a pressure point where geopolitics, energy and finance are colliding in real time.

The uncomfortable truth is that If this crisis ends tomorrow, the effects may not. Because what is being tested is not just oil supply, but the system that governs it.

And for the first time in decades, the question is no longer straightforward: Not who controls the oil, but who controls the system through which oil flows.

And right now, the answer is beginning to change.