[Iran Crisis] Iran's small island handles 90% of oil exports, but Trump still hasn't dared to intervene

Due to rising oil prices, the market generally expects the Iran war to be coming to an end. However, a small island that accounts for 90% of Iran’s oil exports, Trump has yet to touch it so far, fearing it might further boost oil prices.

The coral island—Kharg Island—is about 15 miles off Iran’s mainland coast and is the core hub of Iran’s oil industry.

Kharg Island is Iran’s main oil export hub, with a throughput of up to 3 million barrels per day. Foreign media point out that because most of Iran’s coastline is shallow and cannot accommodate the world’s largest oil tankers, nine out of ten barrels of Iran’s exported oil are loaded via Kharg Island.

However, foreign reports suddenly focus on the island’s vulnerability, with even JPMorgan Chase releasing a report stating that if the U.S. and Israel seize Iran’s Kharg Island port, Iran’s oil exports could halt, production could be halved, and Tehran might further strike other oil infrastructure in the region.

Axios reported as early as March 7 that the U.S. government had discussed plans to seize the island.

JPMorgan data shows that on the eve of the U.S.-Israel attack, Iran had increased its exports from Kharg Island to nearly a record high—shipments from February 15 to 20 exceeded 3 million barrels per day, almost double the usual export rate of about 1.3 to 1.6 million barrels per day.

Kpler data indicates that Kharg Island’s oil storage capacity is about 30 million barrels. Currently, the island stores approximately 18 million barrels of crude oil, which at normal export speeds amounts to about 10 to 12 days of shipments.

Richard Nephew, former deputy special envoy for Iran and now a researcher at Columbia University’s Center on Global Energy Policy, told foreign media, “Without it, Iran’s economy would collapse.”

Nephew pointed out that attacking Kharg would be a major escalation. Both the U.S. and Israel understand that once the island is attacked, Iran is very likely to target Gulf countries’ oil infrastructure in retaliation.

Michael Doran, senior fellow at the Hudson Institute and a former U.S. official, said that the U.S. government has long set a red line regarding Kharg Island. During the 12-day war between Israel and Iran starting June 13 last year, both sides carefully avoided targeting the island’s oil facilities.

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From the current situation, the port still appears to be operational. Foreign media cite data from oil tanker tracking platforms indicating that several supertankers have loaded cargo there over the past week. Analysts say that last Friday night (the 6th), a super oil tanker seemingly passed through the Strait of Hormuz.

Doran believes that the U.S. government does not want to see oil prices rise further. He thinks that only in extreme cases—such as Gulf countries being attacked by Iran and seeking revenge—would Kharg Island be drawn into the current conflict.

Foreign media quote a person familiar with Israeli operations, stating that Israel’s goal is not to “completely destroy Iran,” but to facilitate regime change. Nephew analyzes that if attacking the island is used to promote regime change in Iran, the succeeding government would become vulnerable due to the loss of its core oil export capability.