Relying on "seizing Khark Island," can Trump reopen the "Strait of Hormuz"?

The US is deploying a large number of troops to the Middle East, sharply raising market concerns over the possibility that US forces might seize Iran's oil export hub, Kharg Island. According to Xinhua News Agency, it was revealed on the 20th that the Trump administration is massively increasing troop deployments to the Middle East, including ground forces.

Bloomberg energy and commodities columnist Javier Blas analyzes that Trump is considering seizing Kharg Island as a bargaining chip to force Iran to reopen the Strait of Hormuz. However, this operation not only faces immense military risks, but is unlikely to achieve its intended results in the short term. If Kharg Island and nearby oil facilities are damaged, or if Iran takes retaliatory actions, international oil prices could spiral out of control, thus dealing a heavy blow to the global economy.

Kharg Island is located in the northwest of the Persian Gulf, approximately six kilometers long and three kilometers wide, and 90% of Iran's crude oil is exported from here. For decades, Americans have coveted Kharg Island. US media reports that during the 1979 US Embassy hostage crisis in Iran, then-President Carter considered bombing or seizing the island. In 1988, while still in business, Trump promoted his book "The Art of the Deal" and also suggested seizing the island.

Kharg Island is not Iran’s “only valve” for crude oil exports

Kharg Island typically exports about 1.7 million barrels per day. Regarding whether seizing the island could quickly pressure Iran and reopen the Strait of Hormuz, Javier Blas's core view is: capturing Kharg Island will not shut down Iran’s entire export system.

According to Blas's analysis, Iran has other crude oil terminals, such as the Jask terminal on the Arabian Sea, as well as Lavan Island, Sirri Island, and Qeshm Island in the Persian Gulf. These terminals can provide alternative export routes in emergencies, with a combined daily export capacity of 500,000 to 600,000 barrels.

Blas writes that Jask, located on the Arabian Sea beyond the disputed strait, "may export about 300,000 barrels per day," while the other terminals collectively "may export 200,000-300,000 barrels per day."

In addition, Iran also exports natural gas liquids (NGLs) and refined products (fuel oil, LPG, naphtha, etc.), with a daily export volume of about 1 million barrels, mainly via ports like Assaluyeh, Bandar Mahshahr, and Abadan.

Javier Blas points out that to truly cut off Iran’s oil dollar lifeline, Trump would not only need to seize Kharg Island, but also the other terminals at the same time.

The White House wants “days or weeks,” not months of “maximum pressure”

Blas writes that even if Iran’s exports could be pressed down to very low levels again, it may not be fast enough for the White House's needs.

He compares it historically, noting that during the Trump administration's "maximum pressure" from 2020-2021, Iran's crude oil exports were below "250,000 barrels/day" for several consecutive months, and over more than 24 months from early 2020 to mid-2022, overseas crude shipments never exceeded "750,000 barrels/day;" but he writes, "Tehran did not yield."

On the issue of “why time matters,” Blas writes, unlike Iran, the White House “has no time advantage,” needing to see the reopening of the Strait of Hormuz within “days, or at most weeks”; if it drags on for months, “the global economy will collapse due to high oil prices.”

He also writes that in the fourth week of the conflict, Iran had exported “at least 1.5 million barrels/day” of crude oil and other products; at an average price of “$80/barrel,” this equates to “$2.5 billion.” He says this is “a buffer of income I doubt Tehran expected at the beginning of the bombing.”

Extremely high risks and unpredictable consequences of military action

From a military perspective, seizing Kharg Island is a risky operation. According to Xinhua News Agency, US military experts point out that the US military has three options: amphibious assault, helicopter landing, and paratrooper airborne landing, and may mix these methods, but all carry major risks. Kharg Island is only about 25 kilometers from Iran’s mainland, so US assault troops would constantly be under Iranian coastal fire.

Former US Army officer Harrison Mann analyzes that if an amphibious assault is used, US amphibious fleets transiting the Strait of Hormuz would become concentrated targets for Iranian firepower. Helicopter landings and airborne drops would face serious threats from Iranian air defense and ground fire as well.

Even if the US military successfully takes the island, the subsequent situation could be even more dire. The report notes that US soldiers might be trapped on the island as “sitting ducks”, and occupying the island may not prevent Iran from using shoreline facilities along the strait to attack US vessels. Mann warns that even if the operation isn’t a “suicide mission,” it could easily turn into a “hostage crisis.”

Energy markets face tremendous uncertainty

For the market, the biggest concern is the disruption of global energy supplies from escalating conflict. If Kharg Island’s oil facilities are destroyed in military action, global oil supply would take a severe hit.

More seriously, Iran might retaliate. Dennis Citrinowicz of the Tel Aviv Institute for National Security Studies remarks, Iran’s policy is: “Whatever you do to us, we’ll do the same to you—or even more.” If Iran’s oil infrastructure is attacked, it will retaliate by hitting neighboring countries' energy facilities.

Such chain reactions would trigger dramatic shocks in energy markets. Javier Blas stresses that the White House has no time advantage, needing the reopening of the Strait of Hormuz within days or weeks. If the conflict drags out, the global economy faces collapse risk from surging oil prices.

Javier Blas concludes:

Kharg Island has fascinated Trump for 40 years. Unfortunately, he doesn’t seem to truly understand its significance to Iran and the predicament Iran might face after losing it. Perhaps for this reason, he threatened to constrain Kharg Island on Friday, then issued a 48-hour ultimatum to Iran on Saturday: either reopen the strait, or face attacks on their power grid. As American presidents often do, ignoring history can lead to regretful decisions.

Risk Warning and DisclaimerThe market has risks, and investment should be cautious. This article does not constitute personal investment advice, nor does it take into account the special investment goals, financial situation or needs of individual users. Users should consider whether any views, opinions or conclusions in this article are appropriate for their specific situation. Invest at your own risk.