Consideration is now shifting to Kharg Island, following an Axios report that the Trump administration has mentioned seizing the strategic export terminal.
That’s what J.P. Morgan analysts, together with Natasha Kaneva, the corporate’s head of world commodities technique, stated in an oil flash word despatched to Rigzone on Monday by Kaneva, stating that the terminal “handles roughly 90 p.c of Iran’s crude exports”.
“The island has advanced into the spine of Iran’s export system, which handles the overwhelming majority of the nation’s crude shipments,” the analysts said within the word.
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“It’s a cornerstone of Iran’s financial system and a main income for the Iranian Revolutionary Guard,” they added.
“If Kharg Island had been disabled, the lack of its storage buffer and the shortage of viable export options would quickly set off upstream shut-ins throughout main southwest fields,” the analysts warned.
“With manufacturing close to 3.3 million barrels per day and exports round 1.5 million barrels per day, as a lot as half of nationwide output may very well be in danger if the hub stays offline, and the beforehand assumed 20-day buffer would vanish from day one,” they continued.
Within the word, the J.P. Morgan analysts highlighted that Kharg Island was “largely untouched in current conflicts”. why this has been the case, the analysts stated the island “has usually been considered as a essential vulnerability, but it has hardly ever been immediately focused in fashionable conflicts, largely because of the excessive geopolitical and financial dangers of such an assault”.
“A direct strike would instantly halt the majority of Iran’s crude exports, probably triggering extreme retaliation within the Strait of Hormuz or in opposition to regional power infrastructure,” they stated.
“Throughout the 1979 Iran hostage disaster, advisers advised seizing Kharg Island as leverage in opposition to Tehran. President Jimmy Carter imposed sanctions however kept away from ordering strikes on the island,” the analysts famous.
“His successor, Ronald Reagan, in the course of the Nineteen Eighties Iran-Iraq Tanker Conflict, prioritized defending delivery and focusing on Iranian vessels and missile batteries, leaving Kharg untouched,” they added.
“Though Iraqi forces struck some terminals and tankers in the course of the eight-year conflict, Kharg remained largely operational and harm was sometimes repaired shortly, demonstrating that disabling it might require sustained, large-scale assaults,” the J.P. Morgan analysts identified.
In a press release despatched to Rigzone on March 4, Enverus subsidiary Enverus Intelligence Analysis (EIR) warned that, if Kharg Island had been offline “for an prolonged interval”, this might add an extra $10 to $15 per barrel to EIR’s present 2026 Brent crude worth forecast of $63 per barrel.
In J.P. Morgan’s oil flash word, the corporate’s analysts highlighted that, within the days main as much as the U.S.-Israeli assault, Iran ramped up exports from Kharg Island “to close report ranges – loading over three million barrels per day between February 15-20, almost triple the conventional export tempo of round 1.3-1.6 million barrels per day – suggesting Iran was accelerating shipments forward of the anticipated escalation”.
The analysts famous that storage capability on Kharg Island is estimated at roughly 30 million barrels, and said that, based on Kpler, roughly 18 million barrels of crude is at the moment saved on the island, “equal to roughly 10-12 days of exports below regular situations”.
Rigzone has contacted the White Home and the Iranian Ministry of International Affairs for touch upon J.P. Morgan’s oil flash word and EIR’s assertion. On the time of writing, neither has responded to Rigzone with a remark.
In a market remark despatched to Rigzone on Monday morning, Aaron Hill, Chief Market Analyst at FP Markets, famous that, as of early buying and selling this morning, each WTI and Brent had been “up a whopping 14 p.c and 16 p.c … respectively”.
“These are simply unbelievable strikes, buying and selling close to highs seen in 2022 when Russia invaded Ukraine,” Hill highlighted within the remark, which identified that WTI and Brent “rallied an eye-popping 35 p.c and 27 p.c final week, respectively”.
To contact the writer, e mail andreas.exarheas@rigzone.com
