Why Kharg Island matters: Iran’s strategic oil island in focus as Middle East conflict grows

Iran’s Kharg Island, through which the vast majority of the country's oil exports pass, has been thrust into the spotlight amid growing speculation that it could be the next target of the US and Israel assault. 

The devastating offensive against Iran has now entered its 12th day and is drawing the region into a widening regional conflict.  

As the war intensifies, attention has increasingly turned to the small northern Gulf outpost as a potential flashpoint. 

Attention on Kharg Island was heightened by a report last week from the US outlet Axios, which cited Trump administration officials considering the idea of seizing the island, but so far, the administration is proceeding cautiously around the site.  

Here is what to know about why Kharg Island is considered the centre of Iran's oil industry and what potential plans to target the facility could mean for the wider region. 

The 'Forbidden Island' guarding Iran’s oil lifeline 

Often referred to as the "Forbidden Island", Kharg is surrounded by tight security and secrecy. Access to the island is heavily restricted, with entry limited to individuals holding official security clearances and the area guarded by Iran’s Islamic Revolutionary Guard Corps (IRGC). 

Kharg Island lies around 55 kilometres northwest of the port of Bushehr and roughly 15 nautical miles (about 28 kilometres) from the Iranian mainland. Despite its relatively small size, it plays an outsized role in Iran’s energy sector. 

The island handles around 90 percent of Iran’s crude oil exports, with approximately 950 million barrels passing through its facilities each year. 

According to Iran’s Ministry of Petroleum, Kharg serves as a critical hub that receives crude from three major offshore oilfields: Aboozar, Forouzan, and Dorood.

Oil from these fields is transported through a network of subsea pipelines to processing facilities on the island, where it is stored and loaded onto tankers bound for global markets. 

Despite years of international sanctions on Iran’s energy sector, much of the country's crude continues to find buyers, including China, which has remained a major purchaser of Iranian oil. 

Sanctions have periodically constrained production, but Iran has also sought to expand and modernise the island’s infrastructure.

A report by S&P Global Commodity Insights last May said Tehran added two million barrels of storage capacity at Kharg by rehabilitating tanks 25 and 27, each capable of holding one million barrels. 

A major strategic vulnerability 

Recent reports suggest the island has also been considered in military planning discussions. 

According to Axios, US officials have examined the possibility of "seizing Kharg" as part of broader strategic options.  

Meanwhile, an analysis published by investment bank JP Morgan on Sunday noted that between 1.3 million and 1.6 million barrels of oil pass through the terminal per day.

The bank said Iran had increased export volumes to around 3 million barrels per day in mid-February. 

Kharg's location also adds to its strategic importance, with the island sitting northwest of the Strait of Hormuz, one of the world's most critical maritime chokepoints for global energy supplies. 

The strait has already experienced disruption during the ongoing conflict, affecting oil infrastructure in several Gulf states.  

JP Morgan warned that Kharg, therefore, remains "a critical vulnerability" for Iran, even though the country has tried to diversify its export routes by opening the Jask oil terminal in the Gulf of Oman in 2021 to bypass the Hormuz chokepoint. 

The bank cautioned that a direct strike on Kharg could halt a majority of Iran's crude exports, potentially triggering severe retaliation, including possible attacks on shipping in the Strait of Hormuz or on regional energy infrastructure. 

Escalating rhetoric and regional risks 

While Iran’s oil infrastructure is largely still intact, the US has reportedly struck around 5,000 targets in and around Iran since the conflict began.

Global oil prices surged above $100 per barrel by Monday before falling again, although the IRGC has warned prices could climb as high as $200 if hostilities intensify. 

The idea of targeting Kharg has also been openly discussed in political circles. 

In a January article for the American Enterprise Institute, former Pentagon official Michael Rubin argued that capturing the island - rather than destroying it - could cripple the Iranian state financially. 

"Should [US President Donald Trump] take Kharg, rather than destroy it, he can ensure the regime can never again pay the salaries of its bureaucrats and soldiers," Rubin wrote. 

The former Pentagon adviser, who served during the administration of George W. Bush, said last week that he had discussed the idea with White House officials, suggesting that cutting off Iran’s oil revenues could deal a major economic blow. 

"If they can’t sell their own oil, they can’t make payroll," he said. 

Calls within Israel to target the island have also grown louder, as Israeli opposition leader Yair Lapid openly called for an attack on the terminal. 

"Israel should destroy all of Iran’s oil fields and energy industry on Kharg Island," Lapid wrote on X. "That would collapse Iran’s economy and bring down the regime."

Iran’s IRGC has meanwhile warned that it could retaliate by targeting regional energy infrastructure if its own facilities are attacked. 

"American and Israeli forces have attacked fuel and energy infrastructure and public service centres," an IRGC emergency command statement said. 

"If they choose to wage war against infrastructure, we will respond immediately and target their infrastructure."

Trump’s decades-old remarks resurface 

Kharg Island has appeared in Donald Trump’s rhetoric before, long before his return to the White House. 

While promoting his book 'The Art of the Deal' in a 1988 interview with the British newspaper The Guardian, Trump spoke about the possibility of striking the island. 

"They’ve been beating us psychologically, making us look a bunch of fools," he said of Iran. 

"One bullet shot at one of our men or ships, and I’d do a number on Kharg Island. I’d go in and take it."

The remarks came during the Iran-Iraq War, the brutal conflict that left around half a million people dead. 

During the final years of that war in the late 1980s, the US Navy escorted tankers through the Strait of Hormuz and carried out attacks on Iranian oil facilities and mines. 

War enters energy phase 

The current US-Israel war against Tehran began on 28 February, when an attack killed Iran’s longtime Supreme Leader Ayatollah Ali Khamenei, dramatically escalating tensions across the region. 

On Saturday, Israel launched its first strikes of the conflict on Iranian oil facilities; however, Israeli officials claimed the sites targeted were being used to support military infrastructure.