Iran’s Kharg Island is a small speck in the Persian Gulf – a coral outcrop in deep water with a long history as a trading post and, in the past, as a Christian community dating back to the sixth century.
Fast forward to 2026, and the “Forbidden Island,” as it is sometimes called due to strict access rules, is an oil export center and perhaps the most important location in the war the US and Israel launched on Iran on February 28.
Kharg Island is critical to Iran’s future, US military plans and the global economy, including what you will be paying at the pump and grocery store in the coming months.
Why is it important in Iran
As the data analysis company Kpler detailed in a recent update, the small Kharg Island – which is about eight kilometers long and five kilometers wide – is nevertheless a very important piece of Iran’s oil economy.
“Iran has spent decades building pipelines from major production sites to the island, making it a collection, storage and loading point for the crude before it goes to international buyers,” the review said.
That torture leaves Iran very vulnerable. In the year before the war, 94 percent of Iran’s exports remained on tankers from Kharg. Any further disruption would jeopardize much of the country’s export potential, Kpler warned.
It would also cripple any ability of the Iranian government to do business. The US-China Economic and Security Review Commission estimates that China buys about 90 percent of that oil, and the revenue makes up about half of Iran’s budget.
Why it matters in the US
The US military attacked the island of Kharg in mid-March, when US President Donald Trump said that the US had “absolutely eliminated all MILITARY intent,” leaving investors. is watching for any sign that the strikes are damaging Kharg’s complex network of pipelines, terminals and storage tanks.
Since then, Trump’s vague declarations about the war — which have come amid dire warnings and promises that it will end soon — have included threats to destroy or seize Kharg Island.
The island will be one of the “high-level discussions,” Frank Galgano, a retired US Army general and professor of military geography at Villanova University, told CBC News earlier this month.
The island is an attractive destination for Iran to seize control of the Strait of Hormuz, through which a fifth of the world’s oil is shipped in peacetime.
Experts say the US should be able to take the island easily. The problem is what will come next, as the island is only 26 kilometers from the coast and may face attacks from missiles, drones and weapons.
“They will not allow us to take the island,” said Galgano. “If we take it and hold it, our soldiers can be attacked. We better be prepared to receive the casualties that will come with it.”
Tom Kloza, the chief energy consultant of Gulf Oil, says that the US taking the island makes no sense if the Strait remains blocked.
“It’s a stupid exercise because all the oil loaded on Kharg Island goes right through the Strait of Hormuz,” he said in an interview with CBC News.
Trump — whose polls are low and the November midterms threaten a Democratic takeover of the House and Senate — will face boots on the ground and mounting casualties after campaigning on a promise to avoid foreign interference.
He will also face rising costs for US consumers.
Why is it important to the global economy
Although disruption of Kharg Island, at its simplest level, will mean that Iran will no longer be able to get its oil from China, the rest of the world will not be spared.
As the Center for Strategic and International Studies in Washington notes, oil is a global commodity and “disruptions anywhere affect prices everywhere.” China will have to bid for other goods, raising prices around the world.
Brent crude oil, the international standard, was trading at around 115 US dollars at its peak on Monday, up almost 60 percent since the start of the war.
If oil production at Kharg Island were disrupted, consumers would be further squeezed.
Analysts polled by Reuters expect the price to rise, on average, to $134 US if disruptions remain as they are now, and an average of $153 US if the war damages export facilities on Kharg Island. Some analysts are predicting prices of up to $200 US in that scenario.
And it’s not just drivers who will be affected. Food and everything else that is bought and sold must come from where it is produced. Those costs will increase with higher gasoline, diesel and jet fuel prices.
“Rising transportation costs affect consumer goods but also capital goods. Supply chain problems and rising costs affect, in particular, the chemical and agricultural sectors,” said Thomas Wybierek, NORD/LB analyst.
Experts warn that all this can cost a lot of money. As consumers pay more for necessities like gas, many families will be forced to cut their budgets elsewhere, explains Francesco D’Acunto, a finance professor at Georgetown University.
High fuel prices also affect other sectors, from grocery delivery to utility bills.
“Times are tough for everybody right now,” Amanda Acosta, a Louisiana resident, told The Associated Press while filling up her car’s gas tank this month. “I get less fuel and pay more.”
