15/03/2026
Of all the intellectually engaging posts I have read so far about this war, this one stands out. I invite you to read..
US/ISRAEL VS IRAN WAR EXPLAINED USING GAME THEORY
Courtesy of Vivek Kharti on X.
Iran didn't respond to US bombs with missiles
They responded with GAME THEORY.
And in doing so, they may have just fired the most dangerous shot at the US dollar in 52 years.
Here's the move most people completely missed:
The Strait of Hormuz is closed.
20% of ALL global oil flows through a 21-mile-wide channel.
7 major insurance clubs have pulled coverage.
80% of merchant shipping is locked out.
The world is screaming for a solution.
Iran just gave them one. But the price will shock you.
CNN confirmed it. A senior Iranian official said:
Tehran will allow oil tankers through the Strait again.
But ONLY if the cargo is traded in Chinese Yuan.
Not dollars. Yuan.
This isn't a ceasefire proposal.
This is a declaration of financial war.
To understand WHY this is so dangerous, you need a 30-second history lesson.
1974. Henry Kissinger. Saudi Arabia.
The deal: Saudi Arabia prices ALL oil in US dollars.
The US gets dollar demand. Saudi gets military protection.
OPEC follows. The petrodollar is born.
52 years of American financial dominance begins that day.
Why does this matter to YOU?
Because every country that imports oil must FIRST buy US dollars to pay for it.
That's why every central bank holds dollars.
That's how America borrows cheaply, funds its deficits, and enforces sanctions globally.
The petrodollar is not just finance.
It's America's superpower.
Now here's where game theory enters.
Every country in the world is now a player in a 4-player game:
→ Iran (controls the chokepoint)
→ China (has the Yuan)
→ USA (controls the dollar system)
→ Oil-importing nations (desperate for supply)
Each player has a dominant strategy.
And when you map it out, only ONE outcome is rational.
PLAYER 1: Iran
If it keeps the Strait of Hormuz closed → oil prices spike, US is embarrassed, but Iran's own exports die too. Loses $3B+ monthly.
If it opens in dollars → surrenders leverage, gets nothing, war was pointless.
If it opens in Yuan → gets revenue, weaponizes the chokepoint financially, and chips away at the dollar WITHOUT firing another missile.
Iran's dominant strategy = Yuan offer.
Every. Single. Time.
PLAYER 2: China
45% of its oil imports pass through the Strait.
It's already settled 80-90% of Iranian crude in Yuan via its CIPS system.
CIPS processed ₹175 TRILLION in 2025. Up 43% year on year.
If Yuan becomes the Hormuz standard → China's currency goes global overnight.
China's dominant strategy = back Iran's offer silently.
And they already are. 16.5 million barrels of Iranian crude sailed to China since Feb 28. Under IRGC es**rt. Paid in Yuan
PLAYER 3: USA
This is where the game gets ugly.
Option A: Force the Strait open militarily → bombs Kharg Island (already done). But you can't bomb a financial offer.
Option B: Accept the Yuan arrangement → destroys the petrodollar you've protected for 52 years.
Option C: Sanction everyone who pays in Yuan → but that's 40+ desperate nations. You'll sanction the world.
There is no good move for America here.
This is what game theorists call a "dominant strategy trap."
PLAYER 4: Every oil-importing nation (including India)
This is the classic Prisoner's Dilemma.
If ALL nations refuse the Yuan offer → Iran backs down, dollar survives, oil prices crash. Best collective outcome.
But if YOUR nation refuses while others accept → you get NO oil. Your economy collapses.
So what does every rational nation do?
They secretly accept.
And hope no one notices.
This is precisely how the petrodollar dies. Not in a war. In a thousand silent, self-interested
Still think this is theoretical?
Since Feb 28:
→ 16.5 million barrels sailed to China. Paid in Yuan. Under IRGC es**rt.
→ Other nations' shipping: down 80%.
→ Brent crude hit $103 briefly. Now at $98-100.
→ US bombed Kharg Island's military defenses on March 13.
→ Iran's response? Not missiles. A Yuan offer.
The game is already being played.
Most people just haven't noticed the board yet decisions.
So what's the Nash Equilibrium here?
The point where no player can improve their position by changing strategy?
→ Iran keeps the Yuan condition (it costs them nothing and gains everything)
→ China silently enables it (CIPS is ready)
→ Desperate nations quietly accept (self-preservation).
→ US threatens but cannot enforce at scale
The Nash Equilibrium of this game is:
A bifurcated oil market. Dollar-priced for the West. Yuan-priced for everyone else.
The petrodollar doesn't explode. It just... splits.
What does this mean for markets?
If the Yuan offer gains traction:
→ Dollar weakens structurally over 12-36 months
→ Gold explodes (alternative reserve asset)
→ US Treasuries sold off (less dollar demand = less buying)
→ Indian Oil Marketing Companies bleed (OMC margins crushed by currency + crude)
→ Companies with zero dollar exposure and local demand win
This isn't just geopolitics.
It's the biggest macro trade setup of the decade.
