Israel is not yet willing to touch Iran's most sensitive nerve
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Why does the Kharg Terminal matter so much
Targeting Kharg will be a high-stakes move
If Israel hits this one key energy site in Iran, it can break the back of the Iranian economy, but so far it has kept off this target. Israel has already hit several Iranian energy sites such as the Shahran fuel and gasoline depot, which has at least 11 storage tanks, and Shahr Rey, one of the country's largest oil refineries. Israel has also struck the South Pars Gas Field, which is one of the world's largest and critical to Iran's energy production. However, the most sensitive energy site of Iran is the Kharg Island from where Iran exports most of its oil.During the Iran-Israel conflict in October last year there was talk of Israel planning to hit Kharg island, resulting in a number of oil tankers vacating the waters around the oil-loading terminal on Kharg island.All of the loadings from Kharg Island last week took place from the site's eastern jetty, Homayoun Falakshai, head of crude oil analysis at tracking firm Kpler, had told Reuters. "NIOC may believe it is less risky than the other main jetty located on the western side, in open waters," Falakshai said, referring to Iran's state oil firm National Iranian Oil Co. Large oil tankers were approaching Kharg Island one at a time, leaving the second jetty on the western side of the island unused for several days, with 15-16 more Iranian tankers scattered across the wider Persian Gulf area.Kharg Island is buzzing with activity as Iran is trying to get as much oil as possible, ensuring revenues would continue, at least for a while, if shipments are disrupted. Many oil tankers are now anchoring far from Kharg Island, unlike in normal times, and are making only brief stops to load oil before quickly leaving the area, as per a Bloomberg 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.Kharg Island is a continental island located off Iran's coast near Bushehr, close to the entrance of the Strait of Hormuz . It serves as Iran's principal offshore oil export terminal. Constructed in the 1950s and reconstructed after heavy damage during the Iran–Iraq War, the terminal is equipped with modern infrastructure capable of handling very large crude carriers (VLCCs) and ultra large crude carriers (ULCCs). The terminal includes multiple berths, capable of loading 8–9 supertankers simultaneously, and has a storage capacity of approximately 28 million barrels.Crude oil from Iran's major production fields is transported to Kharg via an extensive pipeline network. The terminal handles over 90% of Iran's crude oil exports, making it the country's single most important oil infrastructure asset.The Kharg terminal is essential for Iran's economy. With international sanctions severely limiting Iran's access to global markets, oil exports remain one of the few major sources of hard currency for the country. The revenues from Kharg's operations fund significant portions of Iran's national budget and support its geopolitical ambitions. Its location near the Strait of Hormuz, the world's most critical oil chokepoint, gives Iran considerable strategic leverage. The ability to control or disrupt energy flows through this region makes Kharg not only an economic asset but also a geopolitical one.Although Iran's oil output is constrained by sanctions, a disruption at Kharg could have outsized effects on global oil markets. Any significant attack or closure of the terminal would raise concerns about the safety of oil supplies from the Persian Gulf, driving up global energy prices.In October 2024, during heightened tensions between Iran and Israel, there was serious speculation that Israel might target Kharg. Iran's top oil officials made publicized visits to the island, and several tankers were observed vacating the area amid rising alerts. While tensions eased without a direct strike, the incident underscored how vulnerable and central Kharg is to Iran's strategic calculations.During the current conflict, Israel has launched a series of strikes on Iranian oil and gas infrastructure, including attacks on the South Pars gas field. However, despite the strategic value of the Kharg terminal, Israel has notably refrained from targeting it. A direct attack on Kharg could provide Iran with a legitimate justification to block or restrict traffic through the Strait of Hormuz. This narrow passage handles approximately one-fifth of the world's oil shipments. Closure or disruption here would have catastrophic implications for global energy markets, shipping and regional stability. A strike on Kharg would almost certainly lead to a sharp spike in global oil prices. This would impact not only Iran and its adversaries but also economies worldwide, especially those heavily reliant on energy imports.Such a move could escalate the conflict dramatically, prompting Iran to retaliate by targeting oil infrastructure in neighboring Gulf states, such as Saudi Arabia's Ras Tanura terminal. The regionalization of the conflict would draw in more actors and could spiral into a full-scale war. Israel's strategy in this phase of the conflict appears to be one of calibrated pressure. By striking critical but less politically explosive infrastructure, it weakens Iran's capabilities without crossing red lines that could provoke uncontrolled escalation or alienate international partners. Iran has developed alternatives to Kharg, including the Jask oil terminal on the Gulf of Oman, which allows exports to bypass the Strait of Hormuz. It has also developed storage capacity aboard a shadow fleet of tankers and at floating facilities, allowing it to continue exports even under duress.While the US and other producers have increased output to reduce global reliance on Gulf oil, the Strait of Hormuz and the Kharg terminal remain integral to the flow of energy. Any threat to Kharg causes anxiety in global markets, leading to volatility and risk premiums.The Kharg terminal is not merely an oil export facility. It is Iran's economic artery. While Israel has demonstrated a willingness to target Iran's nuclear and energy infrastructure, avoiding Kharg suggests a recognition of the enormous risks involved. Striking Kharg could trigger a closure of the Strait of Hormuz, spark retaliatory strikes across the Gulf, cause global energy shocks and economic disruption, and escalate the conflict beyond the point of control. For now, Kharg remains a red line that Israel does not appear willing to cross.(With inputs from agencies)
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