Attack on Kharg Island can severely damage Iran economy

2026-03-14 - 10:55

Following U.S. strikes on military installations on Kharg Island, U.S. President Donald Trump warned that Washington could target the island’s oil infrastructure if Tehran continues attacks on vessels passing through the Strait of Hormuz. While such a move could severely damage the economy of Iran, analysts caution that it would also trigger sharp increases in global oil prices and would not necessarily place Iranian oil production under U.S. control. Nearly 90 percent of Iran’s crude exports pass through Kharg Island, located in the Arabian Gulf about 15 nautical miles (roughly 28 kilometers) off the Iranian mainland, according to dw.com. Although a large share of Iranian oil exports is currently shipped to China, a major disruption to Iran’s crude exports would still have a significant inflationary effect on global markets. Countries such as China would be forced to secure supplies from alternative producers, increasing global demand and pushing prices higher. The economic impact could also be long-lasting. Any substantial damage to the island’s oil facilities could take years to repair, prolonging the strain on international energy markets. Adding to the risk, Iran has warned it may target oil installations owned by companies cooperating with the United States in the region if its own energy infrastructure is attacked. Such retaliation could further disrupt global oil supplies and deepen instability in already fragile energy markets.