I. Introduction

On 28 February 2026, the US and Israel carried out joint military strikes on Iran and killed Iran’s supreme leader Ali Khamenei. In response, Iran launched retaliatory drone and missile attacks on US military bases, Israeli territory and other Gulf States. Moreover, Islamic Revolutionary Guard Corps (IRGC) in Iran issued warnings prohibiting ship passage through the Strait of Hormuz, leading to an effective halt in shipping traffic, as Figure 1 shows.

Figure 1: Map of the Strait of Hormuz (source: http://www.drishticuet.com)

The warnings and subsequent attacks on ships caused a sharp decline in maritime transit, with tanker traffic declining first by approximately 70% and over 150 vessels anchoring outside the strait to avoid risks, and soon traffic went to about zero. This disruption affected approximately 20% of the world’s daily oil supply and significant volumes of liquefied natural gas (LNG), prompting major shipping firms to suspend operations in the area. Oil and gas prices surged, with Brent crude oil rising up to US $126 per barrel at its peak, amid fears of prolonged supply shortages that could push prices toward $100 per barrel. Crude oil prices surpassed $100 per barrel on 8 March 2026 for the first time in four years and then fell. However, as Israel attacked the South Pars Gas field in Iran and then Iran retaliated by attacking Qatar’s Ras Laffan industrial hub, Brent crude oil price jumped back above $110 per barrel on March 18 and then dropped to $107.15 per barrel on March 19. WTI crude oil price also surpassed $100 per barrel on March 18, 2026 and then fell to $93.61 per barrel on March 19, as Figures 2 and 3 show.

Figure 2: Brent crude oil price, 2026 (source: Trading Economics)

Figure 3: WTI crude oil price, 2026 (source: Trading Economics)

This de facto closure of the Strait of Hormuz by Iran sends shock waves across global markets, including energy markets. In addition, things are going from bad to worse. Now the US is considering military strikes on Iranian Kharg Island or its occupation.

As Figure 4 shows, Kharg Island is central to Iran’s oil exports and therefore to its economy. Any attack on its energy infrastructure could also have serious consequences for global oil markets that have already been pushed to the brink.

The importance of Kharg Island lies in its role as the center of Iran’s oil export system. About 90% of Iran’s crude oil exports leave the country via the island, much of it destined for China and other Asian markets. Energy experts warn that if the US strikes energy facilities of Kharg Island, the global crude oil price could jump above $150 per barrel. Then a question arises: What impact will US strikes on energy facilities of Kharg Island have on global oil prices?

Figure 4: Map of Kharg Island (source: The Guardian)

This paper attempts to answer this question. In doing so, this paper first explains why Kharg Island is so important and then describes how Iran will respond to US strikes on Kharg Island. This paper finally examines what impacts US strikes on energy facilities of Kharg Island have on global oil prices.

II. Why is Kharg Island so important?

Roughly one-third the size of Manhattan, Kharg Island is a critical hub for the country’s energy industry. This island handles the vast majority of Iran’s crude oil exports and serves as a key link between the country’s oil fields and global markets.

Located about 15 miles off Iran’s coast in the Persian Gulf, the Kharg Island has deep-water ports that allow large oil tankers to dock and load crude oil for export — something that much of Iran’s coastline cannot easily accommodate.

Located in the northern Persian Gulf, Kharg Island is relatively small — about 8 kilometres long and 4–5 kilometers wide — but it hosts extensive infrastructure, including pipelines, storage tanks, and offshore loading terminals. Established by a US oil conglomerate, Amoco, it was seized by Iran during the 1979 Islamic Revolution.

Oil exports remain one of Iran’s main sources of government revenue, making Kharg Island a critical asset. Therefore, pipelines from some of Iran’s largest oil fields converge here before crude oil is loaded onto tankers. The island’s terminals can load approximately 1.3–1.6 million barrels of crude per day, helped by deep-water access that allows very large crude carriers to dock.

According to an analysis by JPMorgan Chase, Iran increased exports from Kharg Island to near-record levels in the days before the recent escalation in the Gulf region. Between 15 and 20 February, shipments reportedly exceeded three million barrels per day, suggesting that Iran may have been accelerating exports ahead of potential disruptions.

On March 13, 2026, the US said that they struck military targets on Kharg Island. In a social media post, Trump said that the US had “totally obliterated” military assets there. He warned that if Iran interfered with shipping in the Strait of Hormuz, the US could reconsider its decision not to strike the island’s oil infrastructure. [2]

Iranian media later reported that Iran warned it would retaliate against energy infrastructure linked to US companies in the Gulf region if its own facilities were attacked.

“Kharg Island generates $78 billion a year in energy revenue, with irreplaceable deep water berths no other Iranian port can replicate,” Miad Maleki, a former US Treasury official and senior advisor at the Foundation for Defense of Democracies, told TIME. [3]

According to Maleki, Iran has allocated a large share of its oil export revenue to the armed forces, with the military physically taking possession of the barrels and selling much of the oil independently, mostly to China. Maleki said that this makes Kharg island not only the backbone of Iran’s economy, but also the military’s primary revenue source.

“If Kharg island were attacked and its energy infrastructure destroyed, that would take 90% of Iran’s crude exports offline,” Amir Handjani, Resident Fellow at the Quincy Institute, told TIME magazine. “It will also invite massive Iranian retaliation on the energy infrastructure of the Arab countries of the Persian Gulf, beyond what we have seen so far.” [4]

Because of its central role in Iran’s oil exports, any disruption to operations on Kharg Island could ripple beyond the Gulf region, potentially affecting global oil markets and shipping through the Strait of Hormuz, which connects the Persian Gulf and the Gulf of Oman.

Tankers regularly load crude oil at the island’s terminals before shipping it to buyers overseas, including China. As Figure 5 shows, satellite imagery in recent days has shown multiple tankers loading crude oil at Kharg Island, according to maritime intelligence firm TankerTrackers.com.

Much of the oil exported from Kharg Island goes to China, which has remained one of the main buyers of Iranian crude despite Western sanctions. Energy shipments to China account for a significant portion of Iran’s oil revenue and play an important role in funding the Iranian government.

Figure 5: Satellite image shows Iran’s Kharg Island on March 11th, prior to US strikes on the island (source: Airbus)

III. How will Iran respond to US strikes on energy facilities of Kharg Island?

Iran has long threatened to respond to US attacks against its oil infrastructure by attacking oil facilities across the Gulf region – a development that could shake global oil markets even further and cause oil prices to spike.

Should Kharg Island come under serious threat, Iran could retaliate by increasing its attacks with drone or missile strikes on the oil and gas infrastructure of Gulf countries, which have already been battered by drone or missile attacks.

Iran has already attacked oil storage tanks in Oman and Bahrain, as well as the Mina Al-Amadi oil refinery in Kuwait, and has targeted oil tankers and cargo ships in the Gulf.

Analysts warn that potential targets could include pipelines designed to bypass the Strait of Hormuz.

“In particular, attacks on Saudi Arabia’s East-West pipeline and the UAE’s Abu Dhabi crude oil pipeline, which are used to re-route oil flows disrupted by the Strait of Hormuz’s closure, would be a significant hit,” Roukaya Ibrahim, commodities strategist at the investment research firm BCA, said. [5]

JPMorgan’s commodities research team also argued it is likely that an attack on Kharg Island could trigger retaliation in the Strait of Hormuz or against major regional energy facilities.

The JPMorgan highlighted several strategically important oil hubs that could be vulnerable, including Saudi Arabia’s Ras Tanura, the Abqaiq processing facility and the UAE’s Fujairah, as Figure 6 and 7 show.

Figure 6: Saudi Arabia oil & gas infrastructure

Figure 7: UAE’s Fujairah

Indeed, in retaliation for an Israeli attack on its South Pars Gas field on March 18, 2026, Iran launched missile attacks on the Ras Laffan Industrial City, Qatar’s main gas facility, as Figure 8 shows. This attack caused significant damage to the Ras Laffan gas facility and made Brent crude oil price jump above $110 per barrel.

Figure 8: Iran’s largest gas field, South Pars & Qatar’s Ras Laffan Gas Industrial Complex (Source: Al Jazeera)

Iranian armed forces could also continue to target shipping in the Strait of Hormuz using small, fast boats, suicide drones, and naval mines.

Iran’s Foreign Minister Abbas Araghchi said on Mar 14, 2026, that his country would attack the facilities of US companies in the Middle East if Iranian energy infrastructure were targeted.

“If Iranian energy facilities are targeted, our armed forces will target facilities of American companies in the region or companies in which the United States has shares,” Araghchi said, according to the Tasnim News Agency, which is affiliated with the Islamic Revolutionary Guard Corps (IRGC). [6]

Additionally, on Mar 14, Iran’s military threatened to strike multiple cities in the United Arab Emirates, claiming that the US used facilities there to launch its attack on Kharg Island on Mar 13.

The IRGC said the US attack came from “ports, docks, and hideouts within” UAE cities, though it did not specify which ones could be targeted.

“The IRGC considers it its legitimate right to defend its national sovereignty and territory by hitting and targeting the origin of the American enemy missiles in shipping ports, docks, and hideouts of US soldiers sheltered in some cities in the UAE,” the statement said, according to Iranian state media, as reported by Al Jazeera. [7]

Smoke rose over the UAE’s Fujairah port on Saturday March 14, after debris from an intercepted drone fell on the major oil hub, the Fujairah Media Office said.

Handjani at the Quincy Institute added that the subsequent attack on storage tankers in Fujairah was “more than symbolic” because the port was built to bypass the Strait of Hormuz.

“This is Iran saying — I can even hit you on the other side of the straits as well,” Handjani told TIME magazine. “It’s also a warning to the Trump administration. If you take out our energy infrastructure, we will respond in kind in the Gulf countries.”

Iran could, potentially, expand those targets to include vital infrastructure such as desalination plants that provide drinking water for millions across the Gulf region.

IV. The impacts of US military strikes on oil facilities of Kharg Island or its occupation attempts of Kharg Island on global oil price

1. Will the US attack and capture Kharg island?

Will the US capture Kharg island? This question is whether the US military’s strikes are a precursor to the capture of Kharg island.

Strikes on the Kharg island came as the US announced it would send a rapid response marine unit of about 2,500 Marines and sailors to the Middle East. Former US Army Brig-Gen. Kimmitt broached the possibility of that force occupying Kharg Island.

It’s not yet clear what the Marine Expeditionary Unit (MEU) will be used for or where exactly it will be deployed. But these units have traditionally been used for missions such as large-scale evacuations and amphibious operations that require ship-to-shore movements, including assaults and raids.

The US military is deploying thousands of additional Marines and sailors to the Middle East, US officials told Reuters on March 20, 2026. The deployments of the USS Boxer, an amphibious assault ship, along with its MEU and accompanying warships, come after Reuters reported that the Trump administration was considering deploying thousands of US troops to reinforce its operation in the Middle East. [8]

Military experts have also argued that attempting to attack or capture Kharg Island would require a significant number of ground troops — something the Trump administration has so far been reluctant to call in.

According to Handjani, it is certainly a possibility, but “an invasion of Kharg island would precipitate Iranian retaliation on Kharg. It’s close to the Iranian mainland and much easier for Iranian drones and missiles to strike than US bases in the Gulf Cooperation Council.” [9]

Maleki suggests the targets of the overnight strikes on Friday give a clue. “The March 13 strikes destroyed the runway, air defenses, naval base, and mine storage: exactly the targets you neutralize before an amphibious or airborne assault,” Maleki told TIME magazine.

Maleki said there are reports that the US special operations forces, including units from Delta Force, are preparing operations in the Gulf region, alongside additional Marine and naval deployments to the Persian Gulf.

One crucial factor that may determine Trump’s next move is the enormous strategic advantage that control of the island would grant the US, he added. Because of Kharg’s central role in Iran’s oil system, control of the island would effectively determine how much oil Iran can move into global markets.

…“US military presence on Kharg Island would simultaneously guarantee freedom of navigation by dominating the northern Persian Gulf, give President Trump direct control of Iran’s oil sector, and create the physical precondition for redirecting Iranian oil from China to Western markets.” [10]

2. How will US strikes or occupation impact global oil prices?

a. Overview

Regarding the impact of a US attack on Kharg Island energy facilities or an attempted occupation of the island on global oil prices, oil experts say that the factor likely to have the greatest effect on global oil prices is a retaliatory attack by Iran, rather than the US occupation of Kharg Island and the destruction of oil facilities in the process.

Hanjani of the Quincy Institute points out that President Trump’s decision not to attack the oil facilities on Kharg Island was a “wise judgment” rather than a moral one. He stated that if the oil facilities on Kharg Island were attacked and most of Iran’s oil exports were halted, then “Iran would gain a pretext to launch an all-out attack on the energy facilities of other Gulf states, which would lead to a nightmarish scenario for oil prices.” [11]

According to Jim Reid, head of global macroeconomic research at Deutsche Bank, Brent crude prices have surged 42% and West Texas Intermediate (WTI) crude prices 47% since the outbreak of war with Iran on February 28, 2026. Iran’s attacks on Gulf states and the blockade of the Strait of Hormuz have already pushed global oil prices above $110 per barrel, their highest level in years. The International Energy Agency (IEA) has characterized this crisis as the “biggest supply disruption in the history of the global oil market.”

Oil analysts estimate that if the US attacks the export terminal on Kharg Island, global crude oil supply could decrease by 1.5 to 2 million barrels per day. According to Lukaya Ibrahim, a commodity strategist at investment research firm BCA, this represents approximately 3 to 4 percent of global seaborne crude oil trade volume.

Asian countries, including China, are considered particularly vulnerable because they rely heavily on oil imports from the Middle East. Ibrahim said, “A US attack on oil facilities on Kharg Island would not only significantly damage Iran’s crude oil export capabilities but also increase the risk of a broader Iranian attack on energy facilities in the Middle East.”

Ibrahim added that such an escalation could drive international oil prices up to $120 per barrel. However, many experts, including Neil Quilliam of the British think tank Chatham House, warn that international oil prices could rise to $150 per barrel. [12]

b. Impact Analysis

On February 18, 2026, Clayton Sigle of the US think tank CSIS presented the following four scenarios regarding oil supply disruptions and rising international oil prices resulting from an armed conflict between the US and Iran. [13]

Scenario 1: Iran Disrupts Arab Gulf Oil Shipping

This campaign would likely target Gulf export flows transiting the Strait of Hormuz, in which the inbound and outbound shipping lanes are only two miles wide. Iran could attempt to divert or seize control of oil tankers, or strike them outright using drones, fast attack craft, anti-ship missiles, or naval mines. Up to 18 million barrels per day (mb/d) – perhaps far less – of non-Iranian crude oil and refined petroleum products could be throttled or temporarily halted.

This scenario could see several million barrels per day disrupted for a period of weeks until allied naval forces are able to neutralize sea- and shore-based threats to energy cargo flows. Oil prices would initially spike with surging freight and insurance rates, and with some vessel operators likely fleeing the region, further diminishing export capacity. As traders assess the volume and duration of physical disruption, crude oil prices could climb past $90 per barrel, pushing US retail gasoline prices well above $3 per gallon on a national average basis. Like Scenario 4, this chain of events is reversible; Iran could call off its disruptive activities at any time, or global forces could quell their attempts at interruption, enabling Gulf export volumes to rebound.

Scenario 2: US (or with Israel) Directly Attacks Iranian Oil Facilities

In this scenario, US naval and air forces would strike Kharg Island and its supply lines, offshore production platforms, and Iran’s oil refineries. Iran’s export terminal at Kharg Island accounts for nearly all of its 1.6 million barrels per day average export volume. Kharg Island could be taken offline in several ways, including disabling or destroying its ship loading equipment (pumps, hoses, and connecting hardware), damaging its oil storage tanks, or cutting off the flow of oil that reaches the island via subsea pipelines. Choke points for oil deliveries to Kharg Island include the onshore Ghurreh booster station, the manifold station at Ganaveh, and the pipelines themselves.

Figure 9: Oil facilities of Kharg Island (Source:نايف عواض@naiyfaoad)

Not only are Iran’s 1.6 million barrels per day crude oil exports (if limited to Kharg Island) at stake, but also its additional 1.5 million barrels per day of domestic oil production (should platforms/fields be targeted) and its domestic supply of transportation fuels like gasoline (if refineries are damaged). The oil price effects would likely be greater than the $10–12 per barrel spike anticipated with scenario 4 for two reasons: (1) damage to or destruction of Iranian infrastructure could keep barrels off the market for a protracted period of time (potentially offset by activation of OPEC spare production capacity), and (2) anticipation of a further escalation by Iran with something like scenario 3 (described below). Scenario 2, therefore, could take oil prices above $100 per barrel.

Scenario 3: Iran Directly Attacks Arab Gulf Oil Facilities

If the US attacks Iran, then Iran could retaliate by directly attacking oil facilities in Gulf countries. As shown in Figure 10, this attack could involve oil production fields, processing and collection facilities, or oil export terminals in the Gulf region. This scenario could cause disruptions, such as halting the transport of a significant portion of the 18 million barrels of maximum daily oil exports from Gulf countries excluding Iran; of course, this relies on which oil facilities in which countries are shut down and for how long. In addition, the domestic crude oil and refined product supplies of the attacked countries could be jeopardized by millions of barrels per day.

Figure 10: Oil and gas facilities, pipelines, and wells & gas fields in the Middle East

In this scenario, global oil prices could skyrocket, potentially surpassing the $130 per barrel mark recorded following Russia’s invasion of Ukraine in 2022. At the time of Russia’s invasion, the oil supply at risk was approximately 5 million barrels per day.

Oil facilities in Gulf states could be severely damaged or destroyed in this scenario, potentially leading to a long-term loss of export capacity. This applies not only to onshore facilities but also, in particular, to offshore loading platforms, which are critical to export capabilities.

One example of this vulnerability is that Iraq’s entire daily oil export volume of 3.5 million barrels relies on offshore loading facilities located very close to Iranian territorial waters. If these offshore loading facilities are attacked, then it could take a significant amount of time to repair. For example, on November 29 of last year, an attack by Ukraine destroyed the offshore loading platform of the Caspian Sea Pipeline Terminal in the Black Sea, halting crude oil production for several months — amounting to 500,000 barrels per day, or one-third of the terminal’s total output.

Onshore facilities are just as vulnerable as offshore ones, but they can be repaired more quickly than offshore facilities, depending on available recovery resources. For instance, in September 2019, Iran’s attack on Saudi Aramco’s Abqaiq oil processing facility initially halted daily crude oil production by around 5 million barrels, but thanks to rapid recovery efforts, most of the production was restored in less than two weeks.

Scenario 4: Blocking Iranian Crude Oil Shipments by the US or Israel

If President Trump orders US forces to attack Iran, the US military (and together with Israel) could attack not only Iranian military facilities but also oil facilities. In this scenario, the US (or together with Israel) could blockade or occupy Iran’s Kharg Island — a key facility for loading Iranian crude oil onto ships for export — and seize oil tankers transporting Iranian crude oil.

This could disrupt Iranian crude oil exports by up to 1.6 million barrels per day, all of which is destined for China. However, since crude oil is a globally exchangeable commodity, a supply disruption in any region has an impact on global crude oil prices. If the supply of Iranian crude oil is cut off by a US attack, China will likely seek to secure alternative oil sources, which is highly likely to raise international crude oil prices by at least $10 to $12. Of course, this scenario could change at any time. That is, the US (or together with Israel) could lift sanctions on Iranian crude oil shipments at any moment, and Iran’s crude oil exports could recover without permanent damage. This is similar to what happened after the US blocked Venezuelan crude oil shipments. However, due to insurance premiums rising from the risk of war, actual crude oil prices might remain high for a longer period.

Hormuz Bypass Potential Is Limited

Oil export routes bypassing the Strait of Hormuz can handle only a tiny fraction of the Gulf region’s daily crude oil exports. As shown in Figure 11, Saudi Arabia Aramco’s East-West Pipeline connects the oil production hubs of eastern Saudi Arabia with the Port of Yanbu on the Red Sea coast. While this pipeline allows for the diversion of some oil from the Gulf region to the Red Sea region, the transport volume will be significantly reduced. Although the pipeline’s transport capacity reportedly is 5 million barrels per day, approximately 800,000 barrels of export oil are already being supplied to the Port of Yanbu daily through this pipeline, and about 1.8 million barrels per day are also being supplied to six Saudi Aramco refineries located in central-western Saudi Arabia. Thus, the spare capacity of this East-West Pipeline is only about 2.4 million barrels per day, which is significantly less than the 6 million barrels per day that Saudi Arabia typically handles at terminals in the Gulf region. As a result, it is expected that less than half (50%) of the Gulf region’s export volume will be diverted.

Figure 11: Saudi Aramco’s East-West Pipeline (Source: EIA)

As shown in Figure 12, the United Arab Emirates (UAE) can bypass the Strait of Hormuz by transporting approximately half (50%) of its Gulf region exports, amounting to 2 million barrels per day, through a pipeline to the Port of Fujairah in the Gulf of Oman. Since the Port of Fujairah already accounts for about one-third of the UAE’s total crude oil exports of 3.2 million barrels, the supply of the remaining one-third (1 million barrels) would be disrupted if the Strait of Hormuz were blocked.

Figure 12: United Arab Emirates (UAE) Oil Pipeline (Source: EIA)

How the Scenarios Might Unfold

The current war situation in Iran involves scenarios 1 and 3 unfolding simultaneously. Iran has effectively blockaded the Strait of Hormuz, which is only 3 km wide, thereby not only hindering oil transport for Arab Gulf nations but also making crude oil exports virtually impossible (scenario 1). Iran has directly attacked oil tankers from the US and other nations in the Strait of Hormuz and has further attacked the Port of Fujairah in the United Arab Emirates (scenario 3), which allows for crude oil exports by bypassing the Strait. Currently, scenario 1 is in full swing, and scenario 3 has been executed only partially.

If the US attempts to occupy Iran’s Kharg Island and attack its supply chain, offshore oil production platforms, and refineries, scenario 2 will be fully executed. In this scenario, Iran could retaliate by indiscriminately attacking oil facilities in Gulf states (scenario 3). Under such circumstances, a worst-case scenario could unfold in which scenarios 1, 2, 3, and 4 all occur, potentially halting all crude oil exports from the Gulf region. In this case, international oil prices could skyrocket to $150 or $200.

V. Conclusion

This paper attempted to analyze the impact on international oil prices if the US launches a military attack on Iran’s oil facilities on Kharg Island. To this end, the paper first explained why Kharg Island is important and how Iran would respond to a US attack or occupation of the island, and then analyzed how such an attack or occupation would affect global oil prices.

This paper argued that if the US attempts to attack or occupy Iran’s Kharg Island, its supply chain, offshore oil production platforms, and refining facilities, it would constitute the full implementation of scenario 2, proposed by Clayton Seigle of the CSIS. In this scenario, Iran could retaliate by indiscriminately attacking oil facilities in Gulf states; under such circumstances, a worst-case scenario could unfold where scenarios 1, 2, 3, and 4 all occur, potentially halting all crude oil exports from the Gulf region. This paper estimates that in this case, global oil prices could skyrocket to $150 or $200.