Sunday, March 15, 2026

Follow The Money

Goldman Sachs confirms Hormuz oil flows have collapsed from 19.5 million barrels per day to 0.5 million. Net disruption after pipeline rerouting: 17.2 million barrels per day offline. Two independent vessel trackers recorded zero oil tankers crossing the Strait on 12 March. The largest energy chokepoint on Earth is not closed by a navy. It is closed by a spreadsheet.

Seven major P&I clubs cancelled war-risk coverage for the Persian Gulf effective 5th March under Solvency II protocols. Premiums for remaining voyage cover surged 300 to 1,000%, reaching 1% of hull value: $2 to $3 million per VLCC on a seven-day renewable basis. The $20 billion DFC reinsurance facility backed by Chubb has limited uptake because it excludes full P&I liability. Lloyd’s still offers single-voyage cover. Nobody is buying because the premium assumes the mines, and the mines are on the seabed.

The Strait is open. The insurance is not. And without insurance, no vessel moves.

While 19 million barrels per day sit stranded on either side of the chokepoint, one category of vessel continues transiting: Chinese shadow fleet tankers carrying Iranian crude settled in yuan through CIPS. Kpler confirms 11.7 to 16.5 million barrels have reached China since 28 February. These tankers do not carry Western insurance. They do not need Western insurance. They operate under Chinese state-backed coverage, Iranian IRGC safe passage, and yuan settlement through a payment system that processed $24.5 trillion in 2025 at 43% year-on-year growth. The only oil moving through Hormuz is oil that does not touch the dollar.

This is the moment the petrodollar system was designed to prevent.

In 1974, Saudi Arabia agreed to price oil exclusively in dollars in exchange for American military protection. That agreement created a world where every barrel required dollars, every central bank held dollar reserves because energy demanded them, and American financial hegemony rested on the simple proposition that oil equals dollars. For fifty-two years, the equation held. The 2026 war is breaking it not through policy but through physics: the insurance architecture that enabled dollar-denominated oil transit has collapsed, and the only transit still functioning operates in yuan.

The dollar’s share of global reserves has fallen from 71% in 2000 to 59% today. Yuan global payments remain at 2.89%. No single event kills the petrodollar. But the Goldman data reveals what the contrarians miss: the war has created a live demonstration of a post-dollar energy system operating at scale. Chinese tankers transit. Yuan settles. CIPS clears. Iranian oil reaches Chinese refineries at $9 to $12 below Brent while Western buyers pay $96.72. The system works. It is working now. And every day the Strait remains closed to dollar shipping is another day the alternative proves it does not need the original.

President Trump’s multinational warship call is the response: send navies, reopen the Strait, restore dollar-denominated traffic, and kill the yuan alternative before it scales. If the coalition succeeds, dollar pricing survives. If it fails or fragments, the war that was launched to destroy Iran’s nuclear programme will have accidentally created the conditions for the multipolar energy order the dollar was designed to prevent.

The IEA has released 400 million barrels of strategic reserves, the largest coordinated draw in history. It covers 23 days of the 17.2 million barrel daily shortfall. The war is sixteen days old. The reserves are finite. The insurance cancellations are not.

Nineteen million barrels per day reduced to half a million. Zero tankers on 12th March. Yuan tankers the only vessels moving. And the fifty-two-year-old system that priced every barrel in dollars is watching its replacement operate in real time through the waterway it can no longer transit.
A system hoist on its own petar. And the 400 million bbl will that will cover only 23 days of shortfall, will take 200 days to release. And now it’s being released as a “loan.”
The US gov seems to have changed its mind about the terms of the use of the Strategic Petroleum Reserve:

Earlier this week, it announced a **SPR release** (an outright sale, and the method used in the emergency actions of 1991, 2005, 2011 and 2022)

But now, the DOE has published details for something different: a **SPR exchange** (effectively, an oil loan, with the barrels returned later with interest)
So, maybe much longer than 200 days to release.  And the collapse of the insurance/petrodollar system indicates a collapse in the trust of the Trump administration by the world.  No matter what Trump says about how respected we are now. He bestrides the world stage like a clown colossus. We get these guys as a lovely parting gift: Meanwhile, Trump asks China for help in opening the Strait. He doesn’t have a fucking clue.
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