Global Economy — 2026-04-26

UAE Warns It May Shift to Yuan for Oil Sales If Dollar Shortages Persist

UAE Central Bank Governor Balama raised the possibility of establishing a currency swap line during meetings with Treasury Secretary Bessent and Federal Reserve officials, warning the UAE may be forced to use China's yuan for oil transactions if dollar availability tightens. The UAE holds 270 billion dollars in foreign-exchange reserves but faces revenue pressure as Iran has damaged Emirati energy infrastructure and disrupted tanker movement through the Strait of Hormuz. In 2025, approximately 35 percent of UAE crude exports went to China, and the UAE participates in the mBridge cross-border CBDC payment experiment alongside China, Hong Kong, Thailand, and Saudi Arabia. Middle East Eye reports the US may provide a dollar loan if the UAE's economy is jolted by the war.

Analysis
The mBridge CBDC platform, where the UAE participates alongside China, Hong Kong, Thailand, and Saudi Arabia, establishes a technically feasible yuan-settlement pathway, not negotiating theater, with 35 percent of crude exports already tied to China. Per Responsible Statecraft drawing on WSJ and Middle East Eye (single-source, weaker than prior Bloomberg and Fortune reporting), Washington has expanded beyond the swap-line-or-yuan binary to include a potential dollar loan, a less visible backstop that avoids the formal Fed imprimatur. Whether a swap line materializes within the next 60 days is uncertain, though the strategic imperative is enormous, complicated by the need to backstop a Gulf state whose infrastructure is being damaged by the conflict the US initiated. The yuan threat may already be exhausted as leverage: having extracted a US conversation about financial backstops, the UAE may have achieved its negotiating objective, making actual yuan settlement unlikely.

1 sources

UAEs dollar swap threats show how brittle these US alliances can be - Responsible Statecraft