JPMorgan has issued a stark warning that Iran could lose half of its oil output and see most crude exports cease if U.S. and Israeli forces seize Kharg Island. The bank's note highlights that Kharg Island, located about 30 kilometers off Iran's coast in the Gulf, handles approximately 90% of the country's crude exports. Iran is the third-largest producer in OPEC, pumping about 3.3 million barrels of crude per day, plus another 1.3 million barrels of condensate and other liquids, accounting for roughly 4.5% of global oil supply.
A direct strike on the island "would immediately halt the bulk of Iran’s crude exports, likely triggering severe retaliation in the Strait of Hormuz or against regional energy infrastructure," JPMorgan stated. The bank drew historical parallels, noting that during the 1979 Iran hostage crisis and the 1980s Iran-Iraq Tanker War, the island was largely spared, suggesting that disabling it would require "sustained, large-scale attacks."
Meanwhile, the Trump administration is preparing emergency options to control rapidly rising oil prices, which have surged above $100 per barrel and recently reached $119—the highest level since mid-2022—following U.S. and Israeli attacks on Iran that began on February 28. The price spike is driven by severe disruptions to energy flows in the Middle East, particularly through the Strait of Hormuz, which handles about one-fifth of global oil supply.
Policy tools under consideration include a coordinated sale of strategic oil reserves with G7 countries, limiting U.S. oil exports, intervening in oil futures markets, temporarily lifting federal fuel tariffs, and relaxing regulations under the Jones Act. White House spokesman Taylor Rogers stated that maintaining stability in energy markets is a top priority, with plans prepared before "Operation Epic Fury" began.
However, analysts caution that Washington's measures may have limited short-term impact unless flow through the Strait of Hormuz is restored. The volatility comes at a politically sensitive time ahead of the November midterm elections, with rising fuel prices seen as a potential trigger for renewed U.S. inflation.
President Donald Trump has vowed the war is "not close to ending" and warned that if Iran tries to block oil supply, it will be hit "much, much harder." He stated, "We will hit them so hard that it will not be possible for them or anybody else helping them to ever recover that section of the world if they do anything."
