Iran's oil export capacity hinges on a small Persian Gulf outpost: Kharg Island. This location serves as the loading point for nearly all of the country's crude shipments.

On March 13, former President Donald Trump stated on the social media platform Truth Social that U.S. forces had bombed military targets on the island while deliberately avoiding its oil infrastructure. Some of his advisors have supported the idea of a U.S. seizure of the island, while others express concern that such a move carries significant military risks and could trigger another sharp increase in oil prices.

This island, situated near the Iranian coast, handles approximately 90% of Iran's crude oil exports, the majority of which is sold to Asian markets. If Kharg Island's oil assets were targeted, the impact would immediately ripple through the energy supply chain, potentially causing unforeseeable consequences for the global economy.

What is the significance of Kharg Island? This small island, located 15 miles (24 kilometers) from the Iranian mainland, has functioned as an oil export terminal since the 1960s, when it was established by the American oil giant Amoco. The facility was taken over by Tehran following the 1979 Islamic Revolution.

The terminal has a processing capacity of about 1.5 million barrels per day, a figure that exceeds the production of most OPEC member countries. Traders who closely monitor crude flows from OPEC's fourth-largest producer keep a vigilant watch on shipments from the island. Governments seeking to understand the impact of Western sanctions on Iran's oil output also monitor Kharg Island closely. Any operational disruption or unexpected fluctuation in export volumes can rapidly influence global energy prices.

The facility is considered so strategically vital to Iran that any attack causing significant damage would likely provoke a direct military response from Iranian forces.

What are the key oil facilities on Kharg Island? Crude oil is piped from Iranian fields via subsea pipelines to Kharg Island, where it is stored before being loaded onto tankers.

The island's storage tanks have a maximum capacity of up to 30 million barrels, roughly equivalent to one-third of the storage capacity at the Cushing hub in Oklahoma, USA. The island has berthing space for up to eight tankers and possesses the capability for additional loadings via ship-to-ship transfers. According to Iranian officials, Kharg Island can load over 6 million barrels of crude in a single day, with potential to expand to 10 million barrels if necessary. The island's population consists primarily of oil industry workers, who commute to the facility via a simple airport operated by the National Iranian Oil Company.

What was the status of Kharg Island prior to the attack? Prior to the outbreak of conflict, Iran had increased oil loadings at the terminal. Even after hostilities began, tanker loadings did not cease, likely because the Iranian government aimed to move as much of the country's crude onto the water as possible.

These vessels must transit the Strait of Hormuz to reach global markets. Since the war began on February 28, the number of ships passing through this waterway has decreased significantly. However, the volume of crude oil Iran itself ships through the Strait of Hormuz has remained broadly consistent with pre-war levels.

What risks would an attack on Kharg Island entail? Although neither side has reported evidence of major damage to energy infrastructure, such an attack further elevates risks in the oil market. Since the outbreak of the Iran conflict, production cuts by several Gulf states and the near-closure of the Strait of Hormuz have caused crude prices to surge by approximately 50%.

An airstrike on Kharg Island could disrupt the majority of Iran's oil exports for weeks or months, exacerbating the country's already severe economic crisis.

While most of Kharg Island's oil is sold to Asia, a disruption of exports from the terminal could also lead to a further increase in global crude prices. This would drive up inflation in major industrial nations, including the United States—a scenario the U.S. administration is keen to avoid, particularly in a midterm election year.

Iran could also escalate its attacks on energy infrastructure across the region. Following an Israeli strike on Iran's largest natural gas field, Iranian forces have already launched assaults on multiple oil and gas facilities throughout the Middle East.

What might be the outcome of a U.S. invasion of Kharg Island? Through airstrikes, the U.S. military could damage or destroy the island's facilities. However, if ground troops could be deployed to seize control of Kharg Island without causing severe destruction, the U.S. would be positioned to direct the flow of energy from the island rather than completely cripple its production capacity.

Such an operation would come with extremely high risks. Firstly, a ground invasion carries the risk of damaging the island's vulnerable energy infrastructure. Secondly, U.S. military personnel could suffer casualties. Furthermore, if the U.S. were to seize control of Iran's production capacity and begin restricting it as demanded by some political figures, energy prices would likely spike, at least in the short term.