Over the past few years, discussions surrounding "de-dollarization" have steadily gained momentum. Following the Russia-Ukraine conflict, Russia was essentially expelled from the dollar-denominated financial system. Meanwhile, Iran has long relied on a shadow fleet to sustain its oil exports. China, India, and the Gulf states continue to expand settlements in local currencies. Global central banks too, are consistently increasing their gold reserves. In addition, a growing number of nations have begun debating the establishment of alternative payment systems. Against this backdrop, the narrative that "the U.S. dollar system is in decline" has increasingly become a mainstream assessment. However, the escalation of the U.S.-Israel-Iran conflict since 2026, coupled with the abrupt resumption of Venezuelan oil exports, has presented a far more complex reality on the ground.
Following the recent escalation of risks in the Strait of Hormuz, international energy markets have moved beyond simple anxieties regarding supply reductions. The deeper concern now lies in potential systemic disruptions across the interconnected chains of insurance, shipping, clearing, payments, and legal liabilities. Simultaneously, despite the arrest of Nicolás Maduro by U.S. authorities, Venezuelan oil exports have staged a remarkably rapid recovery in just a few short months. According to PDVSA shipping data, Venezuelan oil exports reached 1.23 million barrels per day in April 2026, representing a 14% increase from March’s 1.08 million barrels and a staggering 76% year-on-year surge compared to the 700,000 barrels recorded in April 2025, marking the highest level since late 2018. A total of 66 vessels departed from Venezuelan waters in April, a sharp rise from the 32 ships recorded last April. Exports to the U.S. reached 445,000 barrels, while shipments to India and Europe totaled 374,000 and 165,000 barrels respectively, all significantly exceeding previous benchmarks. Most notably, Venezuela imported approximately 141,000 barrels of naphtha in April, a nearly threefold increase year-on-year, which has been utilized to dilute extra-heavy crude oil and restore essential transport and refining capacities.
As the U.S. progressively eases restrictions on the Venezuelan oil sector, a significant wave of international energy majors has begun re-entering the country’s market. Shell and BP are currently advancing natural gas development projects situated between Venezuela and Trinidad and Tobago. Among these, the offshore Dragon field is estimated to hold 4.5 trillion cubic feet of natural gas reserves, while the Loran-Manatee field, which straddles the maritime borders of both nations, possesses approximately 10 trillion cubic feet. Following the receipt of U.S. licenses, Spain’s Repsol plans to increase its Venezuelan crude production by 50%, building on its current output of roughly 45,000 barrels per day. Italy’s Eni is moving forward with the development of the Junin-5 field in the Orinoco Belt, an area with certified reserves reaching as high as 35 billion barrels. Simultaneously, American firms Hunt Overseas Oil Company and Crossover Energy have begun positioning themselves within the Orinoco Belt, with plans to concurrently develop associated gas for power generation. This shift signifies that international capital is no longer merely betting on Venezuela’s raw resources, but rather on the renewed market predictability afforded by the country’s reintegration into the legitimate global energy trading system.
While these shifts may appear on the surface as a mere recovery of energy supply, the underlying issue they reveal is not who possesses the oil, but rather who possesses the power to make that oil legally acceptable to the global market. In modern energy markets, the value of petroleum is determined not only by reserves and production volumes, but by whether it can be financed by banks, covered by insurers, transported by tankers, processed by refineries, recognized by legal systems, and ultimately traded with confidence across the globe. The foundation of this process is the global trade legalization capacity provided by the U.S. dollar-denominated system. This implies that the truly irreplaceable component of the dollar system is not the currency itself, but its authority to certify global commercial legitimacy and its control over the fundamental infrastructure of trade.
First, the key insight from the Venezuelan case is that oil supply is, in its essence, a "legitimized supply". In conventional discourses, oil supply is often treated as a purely physical matter, with narratives centered on whether oil exists underground, whether wells can extract it, and whether tankers can transport it. However, the reality in Venezuela demonstrates that "supply" in the modern energy market is actually a product shaped collectively by legal, financial, insurance, shipping, and regulatory compliance systems.
Venezuela has never lacked oil. The nation possesses one of the largest proven oil reserves in the world, yet during the eras of Hugo Chávez and Maduro, it remained consistently unable to translate this resource advantage into stable cash flow. The U.S. Energy Information Administration (EIA) has repeatedly noted that Venezuela’s extra-heavy crude depends on diluents like naphtha for transport, while also requiring stable electricity, maintenance of refining equipment, specialized refining capacity, and sustained long-term investment. However, the more critical issue lies in the fact that the country has long since lost the confidence of the global market regarding the integrity of its trade chains.
During the era of sanctions, although Venezuelan oil could still be exported, it was forced to rely on a high-risk shadow trading system characterized by ship-to-ship transfers, anonymous intermediaries, forged bills of lading, shell companies, and discounted sales. In April of last year, Venezuela exported approximately 428,000 barrels to China, but only 138,000 barrels to the U.S. and a mere 64,000 barrels to India. A vast quantity of oil had to be sold at steep discounts relative to international market prices. The cause was not a sudden deterioration in oil quality, but rather the fact that every link in the transaction chain began to extract an additional "risk premium".
Banks fear clearing violations, insurance companies hike premiums or outright refuse coverage, shipowners dread being sanctioned, and refineries worry that the origin of their cargo will fail audits, while intermediaries demand higher margins to cover potential liabilities. Consequently, the same barrel of crude is transformed into a "high-risk asset" under sanctions, whereas under legal authorization, it is reinstated as a "bankable asset", a "collateralizable asset", and an "asset eligible for long-term contracting".
This shift has become particularly pronounced in 2026. Following the reopening of select legal channels by the U.S. through OFAC General License 50A, firms like BP, Chevron, Shell, Eni, Repsol, and Maurel & Prom have re-entered the Venezuelan oil and gas sector. Major trading houses such as Vitol and Trafigura have likewise rejoined PDVSA’s trade chains. Consequently, Venezuelan oil is no longer merely "sellable"; it has effectively re-entered the global standardized trading system. It can now be insured, accepted by banks, purchased by mainstream refineries for the long term, and secured through long-term contracts. As a result, Venezuelan oil exports have seen a rapid and sustained recovery.
This implies that in the modern oil market, the true scarcity lies not in the resources themselves, but in the status of legal eligibility. Petroleum can only be truly transformed into stable wealth once it enters the legal and financial systems recognized by the global market.
Second, the conflict involving the U.S.-Israel and Iran demonstrates that what the dollar system truly controls is the global trade credit chain. The escalating tensions between these parties throughout 2026 have further revealed another dimension of the dollar system. Its control extends beyond mere payments to the very credit chains of global energy trade. As risks in the Strait of Hormuz intensified, the primary anxiety in international markets was not whether the world would face an immediate physical shortage of oil, but rather the rapid spike in risks associated with marine insurance, ship financing, and settlement. The U.S. Office of Foreign Assets Control (OFAC) had previously intensified sanctions against Iran’s shadow banking systems, shadow fleets, intermediary networks, and select Asian refineries, specifically targeting ship-to-ship transfers, anonymous shipping, and the falsification of cargo origins. Consequently, even for transactions no longer settled in U.S. dollars, the overall operational costs have risen significantly.
This reveals the true source of power within the dollar system. Many simplify the dollar system to mere "dollar-denominated pricing", as if simply switching to the yuan, ruble, or other currencies for settlement would suffice to escape its influence. However, reality is far more complex. In modern energy trade, the truly critical element is not the final payment stage, but rather the regulatory compliance of the entire trade chain.
Whether an oil tanker can enter international ports, whether insurance companies are willing to underwrite the voyage, whether banks are willing to issue letters of credit, whether bills of lading can clear scrutiny, whether shipowners fear secondary sanctions, and whether refineries dare to make long-term purchases, these questions collectively determine if oil truly possesses market liquidity. And these links remain deeply embedded within the legal, financial, and maritime systems dominated by the U.S.
Therefore, what the U.S. truly controls is not merely the "dollar", but the capacity for legitimacy certification within global trade. Even if some countries begin experimenting with local currency settlements or even establishing alternative payment channels, as long as global shipping insurance, international financing, trade compliance, and dispute resolution systems remain centered around the U.S. dollar system, the vast majority of international trade still cannot truly escape its influence.
This is also the reason that, following the outbreak of the U.S.-Israel and Iran conflict, even though Iranian oil can still be exported through shadow fleets, the overall transaction costs have continued to rise. Insurance is more expensive, financing is more difficult, shipping risks are higher, and price discounts are greater. The so-called "de-dollarization", in many instances, has not established a new order equivalent to the U.S. dollar system, but has merely built a gray alternative system with higher costs, lower efficiency, and greater risks.
Venezuela stands in stark contrast to Iran. After the former re-entered the dollar licensing system, its exports recovered rapidly. Iran, however, still relies primarily on the shadow trade system to maintain its exports. This disparity demonstrates that what the dollar system truly provides is not merely a payment tool, but the "infrastructure of credibility" in global trade.
Third, the true risk for the dollar system in the future is not alternative currencies, but rather the overdraft of its legitimacy. What the conflicts in Venezuela and Iran have demonstrated is not only the power of the dollar system but also its potential risks.
In recent years, the U.S. has continuously weaponized its financial system, sanction mechanisms, and dollar-clearing capabilities. From the freezing of Russia's foreign exchange reserves to the long-standing energy sanctions against Iran, and more recently, the secondary sanctions targeting shadow fleets and third-party traders, the global market has become increasingly aware that the dollar system is by no means entirely neutral, but rather comes with distinct political conditions.
This shift is driving the formation of a new behavioral pattern in the global market. Many countries do not necessarily wish to completely decouple from the dollar system, as the substitution costs are extremely high. However, they are actively working to reduce their overexposure to a single dollar-denominated system. Consequently, the accumulation of gold reserves, the expansion of local currency settlement, the construction of alternative payment channels, the proliferation of shadow fleets, and the rise of regional financial arrangements have all begun to emerge as tangible trends.
However, these changes do not imply that the dollar system has declined. On the contrary, the Venezuelan case actually demonstrates that the global market remains highly dependent on the legitimate transaction capabilities provided by the dollar system. Once the U.S. issues licenses, restores insurance and clearing channels, and allows formal trade to resume, market capital, shipping, refining capacity, and traders rapidly flood back. This proves that, at present, the dollar system remains the lowest-cost, most efficient, and most market-accepted legitimate trade system globally.
The real issue lies in whether the U.S. will continue to maintain the credibility of this "capacity to supply legitimacy". If sanctions become increasingly frequent, licenses more temporary, and rules more politicized, the global market will gradually conclude that while entering the dollar system offers immense benefits, the political risks are also escalating. Under these circumstances, even if countries cannot truly replace the dollar, they will persist in building "backup systems" to mitigate the risk of being abruptly excluded from the dollar system in the future.
In other words, the greatest challenge facing the dollar system today is not the yuan or gold, but rather whether it will gradually erode the global market's trust in it as a "neutral and legitimate platform" due to its own over-weaponization.
The recovery of Venezuelan oil exports, alongside the ongoing conflicts in Iran, collectively reveals a core reality of the modern energy order. The value of oil has never depended solely on whether it can be extracted, but rather on whether it can be legitimately accepted by the global market. What modern energy trade truly relies upon is not merely oil wells, tankers, and refineries, but an entire global credit chain jointly constituted by legal, financial, insurance, shipping, payment, and compliance systems.
What is truly irreplaceable about the dollar system is also not merely the currency itself, but its legitimizing capability long embedded within the global trade system. It possesses the power to determine which oil is financeable, insurable, transportable, contractable, and tradable over the long term. This capability is the deepest source of strength for the dollar system.
Final analysis conclusion:
The world at present has not truly entered a "de-dollarization era", but is rather entering an era of "reducing dollar exposure". The dollar system still dominates the global energy and trade order. Simultaneously, its trend toward politicization and weaponization is prompting an increasing number of countries to establish alternative channels that are higher in cost and lower in efficiency, but relatively independent. The key to the future global energy and financial order may not lie in whether the dollar will immediately lose its dominant position, but in whether the United States can continue to maintain the credibility of the dollar system as a global "legitimate transaction platform". If this credibility continues to erode, the global market's momentum to ultimately find alternative solutions will only grow stronger.
______________
Zhou Chao is a Research Fellow for Geopolitical Strategy programme at ANBOUND, an independent think tank.
