In the ongoing Iran conflict, U.S. and Israeli officials are contemplating the possibility of seizing or neutralizing the Kharg Island, Tehran’s main oil export hub.
The strategic objective is to significantly curb Iran’s oil revenues, its main source of foreign currency and government funding, thereby increasing economic pressure on the country. Oil exports generate tens of billions of dollars annually and remain Iran’s principal link to the global economy, making them a key target for pressure strategies, Axios reported on Monday.
On Saturday, Yair Lapid, the Israeli opposition leader and a former prime minister, posted on X that Israel “must destroy” the facilities on Kharg Island to “cripple” Iran’s economy.
Kharg Island, in the Persian Gulf, is situated roughly 16 miles off the coast of Iran and 300 miles from the Strait of Hormuz. The island handles roughly 90% of Iran’s crude exports, with terminals capable of loading up to 7 million barrels of oil per day.
What Are The Stakes?
Marc Gustafson, the former head of the White House Situation Room, said in a LinkedIn post last week that while President Donald Trump would see it as a “big PR win opportunity,” targeting Kharg could mean getting troops on the ground. The island already has mines and soldiers on it, making it “risky” for U.S. troops.
Gustafson, currently a senior director of analysis at Eurasia Group, stated that it could mean a “multi-week targeting campaign for Iranian drones,” and it could also drive oil prices higher.
According to JP Morgan, a hit to the Kharg Island could halt most of Iran’s crude exports and trigger severe retaliation, potentially targeting the Strait of Hormuz or regional energy infrastructure, reported Reuters.
Meanwhile, the Financial Times cited former U.S. Iran envoy Richard Nephew, who said Iran’s economy would “bottom out” without the key export facility, but warned that destroying Kharg could weaken any future Iranian government by leaving it unable to monetize its oil resources.
What Does History Say?
Despite multiple strikes on Iran’s military and nuclear facilities over the years, the key oil-export hub Kharg Island has so far remained largely untouched.
During the 1979 Iran hostage crisis, President Jimmy Carter imposed sanctions but avoided striking Kharg Island.
Later, during the Iran-Iraq Tanker War, former President Ronald Reagan focused on protecting shipping and targeting Iranian vessels instead.
Even when Iraqi forces struck terminals and tankers on Kharg Island in 1980, the facility largely remained operational, with damage repaired swiftly—underscoring that disabling it would likely require sustained, massive attacks
Oil Falls, Analyst Points To Short Disruption
WTI crude is down about 7.85% to $87.20 per barrel after topping $100 over the weekend, as signals from Trump that the Iran conflict may soon end helped calm market fears.
However, the oil market is currently pricing in a ‘short disruption,’ not a year-long supply shock, according to Jim Bianco, President of Bianco Research. Bianco said the lack of structural damage is key, noting that once tankers resume moving through the Strait of Hormuz, crude supplies should normalize as no lasting damage to the system has been reported.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by a Benzinga editor.
Image via Shutterstock
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