The United States and Israel have been reluctant up to now to strike Iran's Kharg Island oil terminal during their ongoing campaign against Tehran, amid concerns that damaging the critical export hub could send global oil prices surging toward $150 per barrel.
Kharg Island, located in the Persian Gulf and responsible for about 90% of Iran's crude exports, is widely viewed by analysts as the country's most sensitive economic target, according to an analysis published Wednesday in The Guardian.
Experts say removing the facility from operation could effectively eliminate Iran's oil exports from global markets.
"We may see the $120 a barrel price we saw on Monday heading to the $150 if Kharg were attacked," Neil Quilliam of the Chatham House think tank said. "It's too vital for global energy markets."
Although the United States has struck roughly 5,000 targets in and around Iran, it has so far refrained from attacking the country's oil infrastructure. On Friday, however, reports said it had Kharg military targets, with President Donald Trump saying he would rethink sparing oil facilities there based on the level of interference with commercial shipping through the Strait of Hormuz.
Oil prices have climbed nearly $20 per barrel since the conflict began, as fears of Iranian retaliation have effectively halted tanker traffic through the Strait of Hormuz.
Israel's air force struck two oil refineries and two fuel depots in Tehran on Saturday, plunging parts of the capital into what residents described as "apocalyptic" darkness as thick black smoke covered the city. No further strikes on oil facilities have been reported since.
Kharg Island itself is a small coral formation roughly one-third the size of Manhattan that sits just off Iran's coast in the Persian Gulf.
Pipelines from oilfields in Iran's central and western regions terminate on the island, where crude is loaded onto tankers bound for global markets.
Because much of Iran's coastline is shallow and silty, the island's proximity to deep water allows very large crude carriers to load there. Satellite imagery shows extensive loading jetties extending from its eastern shore.
Typically, between 1.3 million and 1.6 million barrels of oil per day pass through Kharg.
Iran reportedly increased shipments to about 3 million barrels daily in mid-February in anticipation of a potential U.S.-led attack, according to investment bank JPMorgan. The island also stores roughly 18 million barrels of oil as a backup supply.
The island's strategic importance has drawn attention from policymakers in Washington.
"Kharg Island handles roughly 90% of Iran's crude oil exports. Take it out, and this means cutting off the military budget in addition to pulling the plug on the basic services that keep Iranian society functioning," Mohammed Soliman, a senior fellow at the Middle East Institute, told The New York Post.
"Losing Kharg for even a few weeks will create a security and societal crisis in Iran at the same time," Soliman added. "Tehran doesn't get to choose which one to deal with first."
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