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'The Empire Survives or Falls' – Billionaire Ray Dalio Says Iran War Threatens U.S. Dollar Dominance as People 'Naturally Run From The Losers'

finance.yahoo.com · Wed, May 6, 2026 at 8:31 PM GMT+8

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Warnings of a broader energy crunch are growing louder and oil is pushing to new highs as the critical Strait of Hormuz stays shut. But billionaire investor Ray Dalio says the real risk goes beyond oil.

If the Hormuz crisis isn't resolved from a position of strength by the U.S., it could start to erode confidence in American power and the dominance of the U.S. dollar, Dalio wrote in a post on X on March 16. With the world watching closely, U.S. credibility is at risk if it can't project power and achieve its goals in the conflict, Dalio said.

"When the world’s dominant power that has the world’s reserve currency is overextended financially, watch out for allies and creditors losing confidence, the loss of its reserve currency status, the selling of its debt assets, and the weakening of its currency, especially relative to gold," Dalio wrote.

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The Strait of Hormuz crisis has only worsened since Dalio's comments. The closure is the biggest shock to the global oil system in history, with losses of about 13 million barrels per day in exports, according to the International Energy Agency. The disruption has sharply reduced global supply and forced countries to rely on emergency stockpiles.

Blocking critical trade routes to pressure a major power is a pattern that has played out throughout history, Dalio said. In those moments, the stronger nation moves to force the route open, tensions escalate, and the world watches closely. Such conflicts become decisive moments that can determine "whether the empire survives or falls," he said in his post.

Dalio drew parallels to the Suez Canal Crisis of 1956, describing it as part of a repeating pattern where leading powers lose influence after setbacks tied to trade routes, wars, and financial strain.

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"These countries and where their money goes based on what happens," Dalio said. "People and financial flows quickly and naturally run from the losers. These shifts affect markets, especially the debt, currency, and gold markets, and geopolitical power."

If the U.S. shows it can secure the strait and keep oil flowing, it would boost its credibility as a global power and make countries more willing to hold its debt and currency, Dalio said. He pointed to the Iran–Iraq War in the 1980s, when President Ronald Reagan ordered the U.S. Navy to escort oil tankers in the Gulf.

"If President Trump demonstrates his and the U.S.’s power to do what he said he would do, it will greatly bolster confidence in his and the U.S.'s power," Dalio said in his X post.

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This article 'The Empire Survives or Falls' – Billionaire Ray Dalio Says Iran War Threatens U.S. Dollar Dominance as People 'Naturally Run From The Losers' originally appeared on Benzinga.com