On March 30, Donald Trump threatened Iran with “completely obliterating” Kharg Island if a deal with Tehran was not reached to end the ongoing war with the US and Israel.

The American president's warning has since focused attention on the offshore island's central role in Iran’s economy and global energy markets.

Some 90 percent of Iran’s oil exports are shipped from Kharg Island, mostly to China, using infrastructure built under Iran’s last Shah.

Kharg was described in the 1800s as “the most important strategic point in the Persian Gulf,” due to its position at the head of the gulf, and its natural spring water supply.

In the 1950s Kharg was used as a penal colony for anti-shah dissidents, before being chosen as the site for a planned oil export terminal.

The sunbaked coral island, lying 31 kilometers off the coast of mainland Iran, was picked to become the Middle Eastern country’s primary oil export hub due its deep surrounding waters and the relatively calm seas that lap its shores.

Both factors allow for massive oil tankers to dock off the island and fill up on Iranian crude before steaming south through the Strait of Hormuz and on to the world’s oil markets.

Iranian writer Jalal Al-e-Ahmad visited the island during its transformation into an oil hub that began in 1959. He described machinery directed by Iranian and Western engineers “erasing the old Kharg from the face of the earth.”

Underwater pipelines funneling oil some 37 kilometers from the Iranian mainland were laid to Kharg, where storage tanks of up to a million barrels each could hold the crude.

The island’s geography allowed for gravity to flow oil downhill into tankers without the need for complex pumping systems.

Development continued into the 1970s when a "sea island" (pictured above), which allowed for the largest oil tankers to be loaded through submarine pipelines, was completed off the western coast of Kharg.

After the 1979 Islamic Revolution, facilities on Kharg, which were partly run by American oil giant Amoco, were taken over by Iran’s new rulers.

In 1990, Tehran paid more than half a billion dollars in compensation to Amoco for the seizure of Kharg's oil infrastructure as well as several offshore drilling fields.

In 1984, Iraqi strikes on Kharg Island’s oil facilities during the Iran-Iraq conflict escalated what became known as the “tanker war,” in which both sides attacked vessels carrying the other’s oil. The Kharg island facilities were “all but destroyed” by the Iraqi Air Force through the 1980s.

After repairs were completed following the Iran-Iraq War and facilities on Kharg were expanded, the oil hub was offloading around 1.5 million barrels of oil each day, a volume worth some $172 million at April 2026 prices.

Following the US strikes on military facilities on Kharg Island on March 13, Trump stressed that “we destroyed everything on the island except for the area where the oil is…”

Today around 8,000 people are believed to live on the island, which is tightly guarded by Iran’s Islamic Revolutionary Guards Corps.

Analysts say any strike on Kharg’s oil facilities, which bring Tehran tens of billions of dollars in revenue each year, would cripple the Iranian regime's ability to function.

But such a move would also have an outsized impact on the world’s economy at a time of already soaring energy prices.