Emirati Crown Prince’s Trip to China Underscores Importance of Petrodollar Dominance

Gulf energy exports have largely ground to a standstill, but the United Arab Emirates (UAE) remains open for business. Emirati Crown Prince Khaled Mohamed bin Zayed Al Nahyan concluded a three-day visit to China on April 14, during which Beijing pressed for deeper energy cooperation with the UAE. During his visit, the crown prince held meetings with executives from leading Chinese companies, including China National Petroleum Corporation. According to an Emirati readout, the discussion explored “ways to expand cooperation in the energy sector, including clean energy solutions,” as well as “future cooperation opportunities.” Before Prince Khaled returned home, Abu Dhabi and Beijing had signed no fewer than 24 agreements to strengthen bilateral economic cooperation overall.

China, a longtime buyer of sanctioned Iranian oil, is doubling down on Arab Gulf energy as Iranian exports appear increasingly unreliable due to the ongoing war in the Middle East. But China is doing more than buying gas. It is inherently positioning itself as an alternative to the U.S. dollar.

China Is a Top Destination for Arab Gulf Energy

China is the world’s largest energy importer and sources approximately half of its oil and gas from the Middle East. In 2025, Saudi Arabia, the UAE, Oman, Qatar, and Kuwait accounted for approximately 31 percent of China’s total crude imports, making the region critical for Beijing’s energy security. China also imports roughly one-third of its liquefied natural gas (LNG) from the region. Qatar alone was responsible for roughly 28 percent of China’s total supply last year. 

When Iran began targeting Arab Gulf energy infrastructure in early March, Chinese Foreign Minister Wang Yi pressed Tehran to “pay attention to reasonable concerns of its neighboring countries.” Yi’s statement reflects Chinese vulnerability to prolonged disruptions in Gulf energy production. 

China Hedges Between the Arab Gulf, Iran

China has long been the largest purchaser of sanctioned Iranian oil, importing shipments primarily through “teapot” (small, independent) refineries and helping Tehran evade U.S. sanctions. Over 80 percent of Iranian oil shipments in 2025 were destined for China. At the same time, China has balanced its appetite for Iranian crude with efforts to diversify its energy supply and deepen cooperation with Arab Gulf countries. On April 13, Emirati trade minister Thani bin Ahmed Al Zeyoudi remarked that “non-oil trade” between China and the UAE “surpassed the $100 billion mark for the first time in 2025.” In particular, China has invested heavily in Gulf technology, including data centers and renewable energy projects.

Washington Mustn’t Take Dollar Dominance for Granted

Arab Gulf states are free to sell their energy to customers of their choosing, but the United States should press its partners to keep those sales dollar denominated. If there ever were a shift away from the petrodollar system, Chinese currency provides the most likely alternative. Recent reports about Iran charging a “toll” for passage through the Strait of Hormuz indicate that Tehran is accepting payment in cryptocurrency or Chinese yuan. Lloyd’s List maritime intelligence suggests that at least two ships have already paid for passage in yuan. The UAE and Saudi Arabia have also partnered with China on a central bank digital currency platform called mBridge that has predominantly processed yuan-based transactions. A permanent shift away from the U.S. dollar would erode American influence over the international financial system — influence that, for example, gives U.S. sanctions sharp teeth. This risk of the dollar falling out of fashion may not be immediate, but Washington cannot afford to take its eye off the ball.

Natalie Ecanow is a senior research analyst at the Foundation for Defense of Democracies (FDD), where Dana Hassan is an intern. For more analysis from Natalie and FDD, please subscribe HERE. Follow FDD on X @FDD. Follow Natalie on X @NatalieEcanow. FDD is a Washington, DC-based, nonpartisan research institute focusing on foreign policy and national security.