Why is Kharg Island crucial to Iran’s oil network? Inside ‘crown jewel’ struck by US as war escalates

US President Donald Trump said on Friday that American forces had “obliterated” targets on Iran’s “crown jewel”, Kharg Island, and warned that the island’s oil facilities could be the next target. The island is a key player in Iran’s oil network as it hosts the main terminal that manages the country’s oil exports.

The strike targeted military sites on Kharg Island but avoided the energy facilities located there. This appears to serve as a warning to Iran and signals that the US could be prepared to hit parts of the country’s energy infrastructure, something Trump had previously tried to avoid. Follow Iran-US war live updates here.

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In response, Iranian armed forces said that any strike on the country’s oil and energy infrastructure would lead to attacks on energy infrastructure belonging to oil companies that cooperate with the US in the region.

Tehran kept exporting crude oil even as other Gulf producers stopped shipments due to fears of Iranian attacks. Satellite images examined by TankerTrackers.com showed several very large crude oil tankers loading at Kharg Island on Wednesday. Iran exported between 1.1 million and 1.5 million barrels per day from February 28, when the war began, until Wednesday.

The island has ample oil storage capacity. Pipelines connected to the island are also linked by sea to several of Iran’s biggest oil and gas fields.

Crude oil reaches the terminal from three large offshore fields: Aboozar, Forouzan and Dorood. From there, it travels through an underwater pipeline system to processing plants on land before being stored or shipped to international markets, Al Jazeera reported, citing the Iranian ministry of petroleum.

It also houses three major energy facilities run by the Iranian oil ministry. One of them is Falat Iran Oil Company, which produces 500,000 barrels of crude oil daily and is viewed as the biggest among the country’s four main oil producing refineries, according to a report by The New York Times.

The island is also home to Kharg Petrochemical company, along with a large installation used to store and export oil and liquefied natural gas.

In May 2025, S&P Global Commodity Insights reported that Iran expanded the terminal’s storage by two million barrels after refurbishing tanks 25 and 26. Each tank can store one million barrels.

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Steven Wills, a navalist at the Center for Maritime Strategy, told Bloomberg that the island was designed to handle about 90% of Iran’s oil shipments.

If the island were seized or destroyed, “it could, in theory, take out a significant ability of Iran to export oil, and that’s what they live off of.”

Petras Katinas, an energy researcher at the Royal United Services Institute, earlier told Associated Press that Kharg Island plays a central role in financing Iran’s government and military. He said that if Iran lost control of Kharg, the country would struggle to operate, even though the island is not a military or nuclear site.

JPMorgan’s global commodity research team said earlier this week in an investment note that an attack on the island would carry serious economic consequences.

“The island has often been viewed as a critical vulnerability, yet it has rarely been directly targeted,” it said. “A direct strike would immediately halt the bulk of Iran’s crude exports, likely triggering severe retaliation in the Strait of Hormuz or against regional energy infrastructure.”

Kharg Island saw major development during Iran’s oil expansion in the 1960s and 1970s, as large parts of the country’s coastline were too shallow to accommodate supertankers.

With inputs from agencies