What is Kharg Island? Iranian petroleum site takes center stage as oil prices soar
The island accounts for roughly 90% of Iranian oil exports.
Oil prices soared on Thursday as Iran ramped up attacks on tankers, threatening to derail the global economy amid the ongoing war in the Middle East.
Economists appeared to focus on an Iranian blockade in the Strait of Hormuz, a trading route that facilitates the transport of about one-fifth of the global oil supply.
A lesser-known oil chokepoint, Kharg Island, could also play a major role in the petroleum dispute at issue in the U.S.-Israeli war with Iran, analysts told ABC News.
Refineries on the island process 90% of Iranian oil exports, making it a linchpin for the Iranian economy and a major terminal for crude flows out of the region.
A potential disruption of the facilities at Kharg Island could deliver a blow to the Iranian economy, but it would also likely deepen the global oil shortage and drive prices even higher, analysts said.
Here’s what to know about Kharg Island and what it means for the oil dispute at issue in the U.S.-Israeli war with Iran:
What is Kharg Island?
Kharg Island, a small coral land mass spanning 7.7 square miles, is situated in the Persian Gulf off the southwestern coast of Iran. The island is located roughly 300 miles away from the Strait of Hormuz.
The deep waters off the shore of Kharg Island make it a critical site for oil refinery and export, since the Iranian coast offers little access for oil tankers, Hugh Daigle, a professor at the University of Texas at Austin who studies petroleum, told ABC News.
“It’s one of the few places in Iranian waters where they can get oil tankers there. The water is deep enough they can get close to shore,” Daigle said. “It’s geographically unique and strategically important.”
Typically, Kharg Island processes the export of between 1.5 million and 2 million barrels of oil each day, Nicholas Mulder, a professor of history at Cornell University who studies the economic consequences of war, told ABC News. Over the weeks leading up to the outbreak of the U.S.-Iraeli war with Iran, output climbed to nearly 4 million barrels a day, according to an energy industry data firm Kpler.
After oil tankers pick up crude from Kharg Island, Mulder said, they carry it through the Strait of Hormuz and onward to its destination, usually China.
For reference, an average of about 20 million barrels of oil per day passed through the Strait of Hormuz in 2024, according to the U.S. Energy Information Administration, or EIA, a government agency. That means the typical amount of oil transported from Kharg Island accounts for as much as 10% of petroleum sent through the strait on a typical day.
“For a long time, Kharg Island has been a major hub of Iranian oil exports,” Mulder said.
Why is Kharg Island significant to Iran and the global economy?
The Iranian economy depends in large part on oil sales, and such revenue makes up a key source of government funds.
Iran has transported at least 11.7 million barrels of oil through the Strait of Hormuz since war broke out on Feb. 28, CNBC reported on Tuesday, citing data from TankerTrackers.com.
“Iran gets a large amount of its government revenue from the sale of oil,” Daigle said.
Overall shipments in the strait, meanwhile, have all but halted, Faithe Birol, executive director of the International Energy Agency (IEA), said on Wednesday.
The shortage of oil supply sent the price of global crude above $100 a barrel on Thursday, even after an announcement of the largest-ever release of reserve oil from member countries in the 32-nation IEA.
A disruption of output at Kharg Island -- either as a result of a direct attack or war fallout -- could significantly damage the financial standing of the Iranian government, some analysts said. But, they cautioned, the shut-off of supply would mark an attack on civilian infrastructure, and likely push up the global price of oil and worsen the threat faced by the global economy.
U.S. consumers already face elevated gas prices. Prices at the pump jumped to $3.59 per gallon on Thursday from $2.94 per gallon a month earlier, AAA data showed.
“Kharg Island is obviously very vulnerable,” Mark Katz, a professor emeritus of foreign policy at George Mason University, told ABC News.
A disruption at the island, Kataz added, “would affect Iran’s income very strongly if it was taken offline. The problem, of course, is that doing so would mean a great decline in the availability of oil and a rise in oil prices for everyone.”
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