In the war’s destructive wake – marked by the paralysis of the Strait of Hormuz, oil prices spiking above US$110 per barrel and Iranian retaliation striking deep into Gulf territories – the longstanding bargain that defined the region has collapsed.The premise that the US would guarantee Gulf security in exchange for the petrodollar has been exposed as a mirage, as US assets came under direct attack and its protective umbrella proved unable to prevent an existential economic shock to its allies.
Consequently, the outlook for China becoming the Gulf states’ principal economic and political partner – the United Arab Emirates being the sole exception – has shifted from a distant possibility to a near-term imperative, with the petroyuan emerging as a viable successor to the petrodollar and Iran and Russia playing pivotal, albeit contrasting, roles in this new order.