Breaking: US strikes military targets on Kharg Island – Iran’s main oil hub
US President Donald Trump said on Saturday that the US struck military targets at a strategic Iranian outpost in the Persian Gulf and warned it could hit oil infrastructure next if Tehran keeps disrupting energy flows in the Strait of Hormuz, intensifying the two-week conflict in the region.
Trump noted in his post on Truth Social: "Moments ago, at my direction, the United States Central Command executed one of the most powerful bombing raids in the History of the Middle East, and totally obliterated every MILITARY target in Iran's crown jewel, Kharg Island."
"Our Weapons are the most powerful and sophisticated that the World has ever known but, for reasons of decency, I have chosen NOT to wipe out the Oil Infrastructure on the Island," he added.
The strategic island, which manages nearly all of Iran’s crude oil exports, has largely been avoided by both the US and Israel so far.
Officials in the Trump administration have reportedly suggested that seizing Kharg Island remains a possible option.
In another post, Trump said, "Iran had plans of taking over the entire Middle East, and completely obliterating Israel. JUST LIKE IRAN ITSELF, THOSE PLANS ARE NOW DEAD!"
In response, Iran threatened to attack US-linked oil targets.
In a statement cited by Iranian media, the military’s Al-Anbiya Central Headquarters warned that oil and energy facilities linked to companies cooperating with the US would be “immediately destroyed and turned to ashes” if Iran’s energy infrastructure is targeted.
Update: Iranian media, Fars News Agency, reported there is no damage to its oil infrastructure on Kharg Island. However, the same is not yet confirmed by the country's military.
Meanwhile, Qatar’s Defense Ministry said in two separate statements on Saturday that its forces had successfully intercepted a missile attack aimed at the country, AFP News reported.
Separately, in a statement released on Saturday, Hamas, the Iran-backed militant group, called on Tehran to stop attacking neighbouring countries.
“While affirming the right of the Islamic Republic of Iran to respond to this aggression by all available means in accordance with international norms and laws, the movement calls on the brothers in Iran to avoid targeting neighbouring countries,” Hamas said.
Market implications
These headlines are likely to intensify the ongoing volatility in Oil, with prices likely to rocket during the early Asian hours on Monday should Tehran deepen the conflict by attacking the energy infrastructure owned by oil companies cooperating with the US in the region.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
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