Why Trump Emphasizes US Kharg Attack Preserved Iran Oil Lifeline

No other major oil-producing country is so reliant on just one facility. Saudi Arabia, Kuwait and the United Arab Emirates in the Gulf, and massive producers elsewhere such as Russia, Mexico and Venezuela, do not concentrate almost all their export capacity in a single location.

Kharg Island became the linchpin of Iran's oil industry due to a convergence of history and geography. Nowadays, Kharg is widely known among Iranians as the “forbidden island” because of the tight military restrictions and secrecy that surround it.

Yet behind its modern geoeconomic significance lies an ancient history, from early human settlements dating back more than 4,000 years to occupation by various empires that understood its strategic maritime importance as a trading post. The island also housed political prisoners in the mid-20th century, before the construction of Kharg's modern terminal began in 1958.

The island quickly became Iran's dominant export port for two reasons. First, it could be connected by pipeline to the major oil fields in south-western Iran. And second, its deep water location made it one of the only places on Iran's western coast that could accommodate the new supertankers that were at the time dramatically reducing the cost of transporting oil.

Once the gigantic storage facilities, jetties and subsea pipelines feeding the terminal had been constructed, centralizing exports there created significant efficiencies. Oil from multiple fields could share the same storage and loading infrastructure, thereby reducing overall operating costs.

Kharg's dominance in the national oil export system was further reinforced after the Islamic revolution in 1979. This was because regional tensions and Iran's emphasis on self-reliance discouraged it from using pipelines that pass through neighboring countries.

At first glance, Iran's reliance on one terminal for nearly all its oil exports seems like a major strategic vulnerability. There are also no significant operational challenges preventing the US and Israel from destroying it. Yet, paradoxically, this is precisely why the oil facility itself has not been targeted thus far.

Crippling Iran's entire oil industry for months – if not years – would shatter the already fragile confidence in financial markets that Trump can achieve his vague war aims without long-term disruption to the global economy. Some analysts predict that oil prices could soar to US$150 a barrel if Kharg is hit.

To put that figure into context, Russia's 2022 full-scale invasion of Ukraine caused Brent crude to rise to well over US$100 a barrel for four months. This was not the only cause of the roughly 9% surge in inflation seen at the time, but it was an important factor in the ensuing cost of living crisis.

Launching an attack on Kharg's oil operations would likely expose Trump's gamble in launching a war against Iran while simultaneously promising US consumers that virtually everything would become more affordable as a catastrophic error. American voters are indicating that inflation and the cost of living are their biggest concerns ahead of the upcoming midterm elections in November.