Explained: US attack on Kharg Island marks new escalation in war, could send oil prices soaring

Kharg Island — an eight-km-long coral island in the Persian Gulf around 50 km from the Iranian mainland — has been “heavily bombed”. Almost all of Iran’s oil exports flow through that island and despite some 5,000 targets being targeted in that country since the start of the US-Israel military operation, Kharg had been spared so far. In a post on Truth Social, US President Trump said military targets on Kharg Island had been “totally obliterated” in “one of the most powerful bombing raids in the History of the Middle East.” He said he had chosen not to target oil infrastructure on the island for now. According to officials quoted by Reuters, only “military targets” on Kharg Island were targeted and the US Navy would soon begin “escorting tankers” through the Strait of Hormuz. “Our Weapons are the most powerful and sophisticated that the World has ever known but, for reasons of decency, I have chosen NOT to wipe out the Oil Infrastructure on the Island. However, should Iran, or anyone else, do anything to interfere with the Free and Safe Passage of Ships through the Strait of Hormuz, I will immediately reconsider this decision,” Trump said in his post. ## Importance of Kharg Island Kharg Island is arguably Iran’s most sensitive economic target, playing a major role in its economy and oil revenues. It has huge oil storage facilities, and pipelines from the island are connected by sea to some of Iran’s largest oil and gas fields. Bombing the island’s oil infrastructure would neutralise 90% of Iran’s daily crude exports — and trigger a massive spike in the already surging oil prices. This is the reason the export terminal had remained untouched throughout the devastating US-Israel attacks. But even though the latest attack has not targeted oil infrastructure, there are chances that crude prices could move towards the $150 per barrel mark. “No major Iranian oil & gas production, export facility has thus far been attacked. I believe it is a deliberate measure in the interest of stabilizing the oil price. It is partly a signal to Iran to reciprocate by refraining from attacking other countries facilities – which it has so far rebuffed. It is partly also a measure to keep the Iranian people on side in the days after the war, as Iran’s ability to produce and export oil and gas will be the foundation on which its economy can be revived,” a shipping expert told The Indian Express days before the strike. Kharg Island is home to three main energy infrastructure sites belonging to the Iranian oil ministry, including Falat Iran Oil Co., which produces 500,000 barrels of crude oil per day and is considered the largest of the country’s four main oil-producing refineries. The island also hosts Kharg Petrochemical Co., as well as a major facility for storing and shipping oil and liquefied natural gas, the New York Times reported. ## Why Kharg Island’s location makes it crucial Kharg is where pipelines from Iran’s oil fields in the middle and the west of the country terminate. Set up by a US oil conglomerate, American Oil Company or Amoco, it was seized by Iran during the 1979 revolution. Amoco continues to retail fuel brands under BP ownership. Kharg is particularly significant for Iran since most of that country’s coastline is too shallow for very large crude carriers to dock. Kharg is close to deep waters and has jetties built in on its eastern shore. This helps large oil tankers to dock there easily. On an average, around 1.5 million barrels of oil pass through Kharg on a daily basis, though Iran had sharply ramped up volumes to 3 million barrels a day in mid-February, according to the investment bank JP Morgan. This was in anticipation of a US-led attack. A further 18 million barrels are stored on Kharg as a backup, JP Morgan said in a note quoted by The Guardian. Anil Sasi is the National Business Editor at The Indian Express, where he steers the newspaper’s coverage of the Indian economy, corporate affairs, and financial policy. As a senior editor, he plays a pivotal role in shaping the narrative around India's business landscape. Professional Experience Sasi brings extensive experience from some of India’s most respected financial dailies. Prior to his leadership role at The Indian Express, he worked with: The Hindu Business Line Business Standard His career trajectory across these premier publications demonstrates a consistent track record of rigorous financial reporting and editorial oversight. Expertise & Focus With a deep understanding of market dynamics and policy interventions, Sasi writes authoritatively on: Macroeconomics: Analysis of fiscal policy, budgets, and economic trends. Corporate Affairs: In-depth coverage of India's major industries and corporate governance. Business Policy: The intersection of government regulation and private enterprise. Education Anil Sasi is an alumnus of the prestigious Delhi University, providing a strong academic foundation to his journalistic work. Find all stories by Anil Sasi here ... Read More