About the author
Lt Col Manoj K Channan (Retd) served in the Indian Army, Armoured Corps, 65 Armoured Regiment, 27 August 83- 07 April 2007. Operational experience in the Indian Army includes Sri Lanka – OP PAWAN, Nagaland and Manipur – OP HIFAZAT, and Bhalra - Bhaderwah, District Doda Jammu and Kashmir, including setting up of a counter-insurgency school – OP RAKSHAK. He regularly contributes to Defence and Security issues in the Financial Express online, Defence and Strategy, Fauji India Magazine and Salute Magazine.
*Views are personal.
The five-day pause announced by President Donald Trump now appears less like a diplomatic bridge and more like an unstable ledge. Markets initially cheered the reprieve: oil prices fell sharply, equities rose, and the dollar weakened after Trump said there had been “productive” conversations with Iran.
However, Tehran publicly denied any direct or indirect talks. By March 24, oil prices had already increased again as traders reassessed the risk that the pause might be only a temporary interruption before a broader escalation.
What makes the present moment more dangerous is that the war is no longer limited to missiles, tankers, pipelines, and power plants. Iran’s parliamentary speaker, Mohammad Bagher Ghalibaf, has now openly threatened holders of U.S. Treasury bonds, calling them legitimate targets because, in his words, they finance the American war machine.
That statement should not be dismissed as a theatrical outburst. It is a psychological and financial threat aimed at the confidence mechanism that supports the U.S. debt market, which may make the audience feel cautious about market stability.
Treasuries Are Not the Battlefield, But Confidence Is
Iran cannot attack the Bank of Japan or physically target every custodian, reserve manager, sovereign wealth fund, or offshore financial entity that holds Treasuries. However, it does not have to. The goal of the threat is to create friction in the one area where perception is as crucial as firepower: the sovereign debt auction. If even a small number of buyers hesitate, demand a slightly higher premium, or shift assets into gold, cash, euro assets, or shorter-term securities, then borrowing costs increase. In a war scenario, even a few basis points are significant.
This is what makes the statement strategically interesting. Iran seems to suggest that if Washington and its allies can weaponise energy flows, Tehran might attempt to weaponise risk perception within the financial structure of the dollar system. It is coercive signalling, not physical force. Its goal is less to cause direct harm and more to prompt market participants to question whether owning Treasuries now entails a new geopolitical risk premium. That alone can unsettle markets already shaken by oil shocks, supply disruptions, and mixed signals from Washington.
The Dollar’s Strength Is Real, but So Is the Drift Away From It
It is premature to assert that a single Iranian social media post can seriously destabilise the dollar. The dollar still makes up about 56.9% of reported global foreign-exchange reserves, which should reassure the audience about its resilience despite long-term de-dollarization trends.
But the longer-term trend is clear. The dollar’s share of reserves has decreased from much higher levels two decades ago, and China has gradually reduced its Treasury holdings over time, even as other investors, especially private entities and custodial centres, continue to participate.
De-dollarisation is not a sudden change; it’s an ongoing process that could weaken U.S. geopolitical influence and challenge the stability of the dollar-centric financial system, especially if reserve managers perceive heightened risks from sanctions and coercive geopolitics.
The third front-financial can catalyse broader escalation, where increased yields and sanctions workarounds may intensify kinetic conflicts or energy disruptions, creating a complex web of interconnected risks that policymakers must monitor closely.
The first front remains kinetic: missiles, drones, air defence penetration, and retaliatory strikes across Iran, Israel, Lebanon, Iraq, and Gulf-linked infrastructure. The second front is energy: the Strait of Hormuz, LNG bottlenecks, damaged facilities, insurance costs, and the risk premium embedded in every barrel and cargo. The third front is now financial: yields, reserve composition, sanctions workarounds, and the political risk attached to financing Washington’s war posture. Reuters has already reported a sharp rise in global volatility, a record low in the Indian rupee, and heavy stress across equities and bonds as the conflict disrupted energy expectations and capital flows.
That is why Ghalibaf’s threat should be viewed as strategic messaging rather than dismissed as bluster. Iran has suffered significant conventional losses, but a weaker opponent often seeks leverage in areas where a stronger adversary is most vulnerable. The United States can destroy fixed targets, but Iran, with fewer conventional options, aims to increase the cost of American power by expanding the zone of uncertainty. This is classic asymmetric statecraft.
Energy Shock Is Already Global, but the Retail Panic Is Being Overstated
The energy aspect of this crisis is serious and has a significant impact. Reuters reported that Brent briefly exceeded $113 and WTI went over $100 before a pause caused prices to drop sharply; analysts have warned that Brent could reach $150 if Hormuz remains effectively blocked into April. The International Energy Agency stated that the crisis surpasses the oil shocks of the 1970s in terms of disruption potential, with damage to energy infrastructure across the region and impacts extending to LNG, petrochemicals, fertilisers, and helium.
But one point needs clarification. Reuters said that U.S. gasoline had risen past $3.75 a gallon on March 17 and was approaching $4 by March 23. Other market trackers indicate the national average is around $3.9 to $4.0, although some parts of California were already above $5.7 and isolated stations over $6, so the price surge is significant.
India and the GCC are in the Direct Line of fire
Reuters reported the rupee hitting a record low of 93.98 per dollar on March 23 as oil surged and investors pulled money from Indian assets. India’s exposure is double-edged: it is vulnerable to higher crude prices and shipping disruptions, and to any prolonged financial turbulence that pushes the dollar higher again or tightens global liquidity. The offer of Iranian crude to Indian refiners at a premium to Brent under temporary sanctions waivers shows how quickly crisis economics can distort normal commercial logic.
For the GCC, the threat remains more immediate. Iran has already threatened energy infrastructure in states hosting U.S. forces, and Reuters reported the Revolutionary Guards saying companies with U.S. investments would be “destroyed” if Washington attacked Iranian power assets. That endangers not only oil and gas facilities but also desalination, shipping, ports, data, insurance, and sovereign wealth systems. In the Gulf, energy networks and national stability are closely linked. A broad escalation of the war into the GCC would not only increase prices; it could also undermine the foundations of global trade and capital flow.
Unverified Military Claims Add to the Fog
The reports that Iran’s Fattah-2 hypersonic missile struck a fortified Israeli command centre and killed senior officers should still be approached with caution. There is verified reporting of Iranian strikes causing injuries near Dimona and Arad, and broader evidence that missile salvos are testing the limits of regional air defence.
Conclusion: The Pause Is Fragile, the Escalation Ladder Is Not
The true significance of this moment is that Iran has signalled an attempt to expand the conflict from the geographic to the financial realm. The Strait of Hormuz was always the obvious pressure point, but the Treasury market is the more daring target.
Tehran may not be able to dismantle the dollar system entirely. Still, it can try to increase the costs of trusting it, especially in a world already slowly moving toward reserve diversification.
That is why the five-day pause might not last. If Washington decides that financial intimidation is now part of Iran’s strategy, the urge to end the pause early and reassert deterrence will grow. In that case, the next phase will not be a straightforward battlefield exchange. Instead, it will be a comprehensive shock across oil, shipping, insurance, currencies, sovereign debt, and supply chains. If a crisis occurs, it won’t be limited to trenches or tarmacs but will spread through the GCC, trade routes, balance sheets, and every economy that still believes distant wars remain distant.