Kharg Island: The oil nerve Israel won’t touch, yet

Despite multiple strikes on Iran’s energy infrastructure, Israel has avoided targeting Kharg Island, Tehran’s most critical oil export terminal, which analysts warn could severely cripple Iran’s oil-dependent economy, according to an Economic Times report.

In recent operations, Israel has reportedly struck multiple Iranian energy sites, including the Shahran fuel and gasoline depot, home to at least 11 storage tanks, as well as the Shahr Rey refinery, one of Iran’s largest.

The South Pars Gas Field, a cornerstone of Iran’s energy production and among the largest in the world, has also been targeted.

Kharg Island, however, remains untouched.

Located in the Persian Gulf, the island handles the bulk of Iran’s crude oil exports and is considered one of the most sensitive and strategically important sites in the country’s energy sector.

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During the Iran-Israel conflict in October last year, reports emerged that Israel was considering a strike on Kharg. The speculation was enough to prompt the temporary withdrawal of several oil tankers from the waters surrounding the terminal — a clear sign of the potential fallout of such an escalation.

According to Reuters, citing Homayoun Falakshai, head of crude oil analysis at tracking firm Kpler, all of the loadings from Kharg Island last week took place from the site’s eastern jetty.

Local reports have also suggested that oil loadings are being redirected to the eastern jetty on the island, believed to be safer than the exposed western jetty.

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Iran is ramping up exports at a feverish pace, averaging 2.23 million barrels per day in the first five days after Israel’s latest military campaign. That’s a 44 per cent jump from prior levels.

“NIOC may believe it is less risky than the other main jetty located on the western side, in open waters,” Reuters quoted Falakshai as saying, referring to Iran’s state oil firm National Iranian Oil Co.

Large oil tankers have been arriving at Kharg Island one at a time, leaving the western jetty unused for several days, while 15–16 other Iranian tankers remain scattered across the wider Persian Gulf, according to a Bloomberg report.

The island is seeing intense activity as Iran accelerates oil exports to secure revenues amid fears of potential disruption. Unlike normal operations, many tankers are now anchoring farther offshore and making only quick stops to load before rapidly departing the area, added the report.

Iran’s exports surged after Israel launched its offensive. In the first five days of the campaign, Iran exported an average of 2.23 million barrels of oil per day, a 44% increase from previous levels.

Were Kharg Island to be targeted this time, Iran would lose a key source of revenue but then have little reason not to strike back in kind.

Why Kharg terminal matters

Located off Iran’s coast near Bushehr and close to the strategic Strait of Hormuz, Kharg Island is the country’s main offshore oil export hub.

Built in the 1950s and rebuilt after sustaining heavy damage during the Iran–Iraq war, the terminal is equipped to handle the world’s largest oil tankers, including VLCCs and ULCCs. With multiple berths capable of loading 8–9 supertankers simultaneously and a storage capacity of around 28 million barrels, Kharg is a critical node in Iran’s oil infrastructure.

Over 90% of Iran’s crude oil exports pass through Kharg, fed by a vast pipeline network from the country’s main oil fields. In a heavily sanctioned economy, Kharg’s output provides a vital stream of hard currency, helping fund Iran’s national budget and geopolitical ambitions.

Its proximity to the Strait of Hormuz — the world’s most important oil chokepoint — adds strategic significance, giving Iran leverage over global energy flows.

Despite sanctions limiting Iran’s overall oil production, any major disruption at Kharg could trigger global market instability, pushing up oil prices and raising fears about the security of supply from the Persian Gulf.

Striking Kharg high-stakes gamble

In October 2024, amid soaring tensions between Iran and Israel, speculation swirled that Israel might target Kharg Island, Iran’s most critical oil export terminal.

Iranian oil officials made high-profile visits to the island, and tankers were seen leaving the area as security alerts intensified. Although no strike took place, the episode highlighted both Kharg’s vulnerability and its central role in Iran’s strategic and economic calculus.

In this conflict, Israel has launched multiple strikes on Iranian energy assets, including the South Pars gas field. Yet despite Kharg’s strategic significance, Israel has so far held back from targeting it.

A direct hit on Kharg would not only devastate Iran’s oil exports but could also provide Tehran with justification to disrupt or block traffic through the Strait of Hormuz, a narrow chokepoint that handles roughly 20% of the world’s oil supply.

Such a move would have far-reaching consequences, sending global oil prices soaring and destabilising energy markets and shipping routes, reported Economic Times.

According to the report, the stakes of striking Kharg extend beyond Iran.

A move that bold could provoke Tehran to retaliate against oil infrastructure in neighboring Gulf states, such as Saudi Arabia’s Ras Tanura terminal, potentially drawing the region into a broader conflict. The resulting escalation could spiral into a full-scale war, pulling in more actors and further destabilising the West Asia, added the report.

Israel’s current strategy appears to favour calibrated pressure: striking key energy and nuclear-related sites while avoiding actions that could trigger uncontrollable escalation or alienate international allies.

This measured approach suggests that Kharg remains a deliberate red line, the Economic Times reported.

While Iran has worked to build redundancy through facilities like the Jask terminal on the Gulf of Oman and offshore tanker-based storage, Kharg remains its economic lifeline.

Any disruption there would have a cascading effect on global oil flows. For energy-importing nations and market watchers, even the threat of an attack on Kharg causes price volatility and raises geopolitical risk premiums.

In short, Kharg is not just an oil terminal, it is the heart of Iran’s export economy and a geopolitical flashpoint. For now, Israel appears to recognise that attacking it would carry consequences too great to risk.

With inputs from agencies