Why Kharg Island Is Pivotal for Oil Markets in Iran War

Iran has been shipping it’s oil out now as it was before the Usrael attack. There’s talk about US troops trying to take Kharg Island… This is not going to go well for the US troops. Iran has the advantage if US troops enter and they will take it.

I’ve heard many speak of Winston Churchill and his Gallipoli Debacle

The first step would be an attack on the Gallipoli Peninsula on the northern side of the Dardanelles, an operation that Churchill, who now became the plan’s chief advocate, knew would be risky. “The price to be paid in taking Gallipoli would no doubt be heavy,” he wrote, “but there would be no more war with Turkey. A good army of 50,000 and sea-power—that is the end of the Turkish menace.”

But, that didn’t work out as Churchill had hoped

Kharg Island- Via archive.ph

• Iran’s oil exports hinge on a small outpost in the Persian Gulf: Kharg Island, the loading point for almost all of the country’s crude shipments.
• President Donald Trump has said the US bombed military targets on Kharg Island on March 13 but spared its oil infrastructure. Since then, an idea has gained momentum with some of his advisers — that of a US invasion of the island. Others have expressed concerns, not only about the military risks of such an effort, but that it could trigger another spike in oil prices.
• The island off the Iranian coast ships about nine out of every 10 barrels of Iran’s crude exports, most of it bound for China. If Kharg Island’s oil assets became a target, the impact would immediately ripple across energy supply chains, with unpredictable consequences for the global economy.
• What’s the importance of Kharg Island?
• The small island lying 15 miles (24 kilometers) off the Iranian mainland has been an oil export terminal since the 1960s, when it was established by the American oil giant Amoco. The facility was seized by the Iranian state following the country’s 1979 Islamic revolution.
• The Kharg terminal has been handling around 1.5 million barrels per day, a volume that eclipses the output of most OPEC countries. Shipments there are monitored closely by traders who track the ebb and flow of crude from OPEC’s fourth-biggest oil producer. Governments seeking to understand the impact of Western sanctions on Iran’s oil output also monitor the site closely. Any disruption to operations or unexpected swings in export volumes can quickly affect energy prices as traders factor in the likely impact on global supplies.
• The facility is seen as so strategically vital for Iran that any attack that inflicts significant damage on the site would likely trigger direct retaliation by the Iranian military.
• What are the key oil facilities at Kharg Island?
• Oil makes its way from Iranian oil fields through subsea pipes to Kharg Island, where it is stored before being loaded onto tankers.
• Kharg Island is dotted with storage tanks that can hold as much as 30 million barrels — about a third of the capacity of the giant US storage hub at Cushing, Oklahoma. It has space to berth eight tankers and capacity to load more via ship-to-ship transfers. More than 6 million barrels of crude can be loaded at Kharg Island in a day, stretching to as many as 10 million barrels if necessary, according to Iranian officials. The island is populated mainly by oil industry workers, who transit to and from the facility via an airstrip operated by the National Iranian Oil Co.
• What was happening on Kharg Island before the attack?
• Iran increased oil loadings at the terminal prior to the start of the conflict. Tankers continued to fill there after hostilities began on Feb. 28 — probably because Iran’s government wanted to get as much of the country’s crude as possible onto the water and out of harm’s way.

To reach global markets, those vessels need to transit through the Strait of Hormuz, the vital waterway over which Iran has exercised control since the war broke out. ( Hormuz is accessible to some, including those willing to pay high insurance rates ) The risk of Iranian attacks on ships has slowed maritime traffic from other countries in the region to a near standstill, but the Islamic Republic has been moving its own crude oil through the strait in quantities broadly comparable to those before the war began.

What does attacking Kharg Island risk?

• While neither side has reported evidence of major damage to energy infrastructure, an attack resulting in such harm would raise the stakes for oil markets in a conflict that has already hit production and all but closed the Strait of Hormuz, sending crude prices soaring by about 50%.
• Airstrikes on Kharg Island’s energy facilities could disrupt most of Iran’s oil exports for weeks or months and worsen what is already a serious economic crisis in the country.
• While most of the oil from Kharg Island goes to China, disrupting exports from the terminal would also likely send global crude prices even higher, stoking inflation in major industrialized nations including the US — something the Trump administration will want to avoid in an election year.
• There’s also a risk of Iran escalating strikes on energy infrastructure across the region. The Islamic Republic’s military has hit several oil and gas sites across the Middle East after Israel targeted Iran’s largest gas field.
• What might a potential US invasion of Kharg Island achieve?
• With airstrikes, the US military can damage or destroy facilities on the island. Deploying ground troops to take over Kharg, if achieved without serious damage, would allow the US to dictate energy flows out of the island rather than knocking out the capacity entirely.
• Such a move would come with extreme risks. For one thing, a ground invasion of the island risks damaging the delicate energy infrastructure there. US troops could be wounded or killed. And energy prices would likely spike, at least in the short term, if the US seized Iranian production capacity and began throttling it in accordance with Trump’s demands.