Tehran’s oil industry is powered by Kharg Island in the Gulf

Iran’s Kharg Island, a small but strategically vital strip of land nestled in the waters of the northern Persian Gulf, has been left untouched by U.S. and Israeli forces even as the Middle East conflict enters its second week.

The coral island, which is located about 15 miles off the coast of mainland Iran, serves as the centerpiece for Iran’s oil industry.

It is estimated that around 90% of the country’s crude exports pass through it before tankers then travel through the Strait of Hormuz. The island is also said to have a loading capacity of roughly 7 million barrels per day.

Kharg Island’s economic importance to Iran makes it particularly vulnerable to the threat of military action, although analysts say that any attempt to seize it would likely require a ground troop operation, which the U.S. appears reluctant to undertake.

An attack would also likely prompt further energy market volatility at a time when oil prices have soared to nearly $120 a barrel.

Seizing the island “would cut off Iran’s oil lifeline,” which is essential for the regime, according to Petras Katinas, a research fellow in climate, energy and defense at RUSI, a London-based defense think tank.

“Of course, with shipping via the Strait of Hormuz now stopped, they cannot sell oil anyway, but looking ahead, seizure would give the US leverage during negotiations, no matter which regime is in power after the military operation ends,” Katinas told CNBC by email.

“Yet, seizure, would require a ground troop operation, which this administration seems hesitant to undertake. At least for now,” he added.

Crude futures climbed to their highest level since mid-2022 on Monday after the U.S. and Israel launched a fresh wave of strikes across Iran over the weekend.

The attacks struck several Iranian fuel sites, including oil storage depots, signaling a new phase of the war as the sprawling Middle East crisis continues into its 10th day.

International benchmark Brent crude futures with May delivery traded 11.5% higher at $103.40 per barrel on Monday, paring earlier gains, while U.S. West Texas Intermediate futures with April delivery were last seen 12% higher at $101.88.

“If President Trump were to decide to seize this pivotal hub, it would deal a significant blow to the Iranian regime, as it would deprive them of a critical source of revenue. Such a move would be reminiscent of the U.S. intervention in Venezuela at the beginning of the year, when it effectively took control of the country’s oil sector,” Tamas Varga, an oil analyst at brokerage PVM, told CNBC By email.

“While it might suggest the resumption of Iranian oil exports—under U.S. supervision, of course, and only if the Strait reopens—it would at the same time…