Trump weighs seizing Iran's Kharg Island as oil tops $85

The White House discussed seizing Iran's main oil terminal and expanding military operations to include ground troops, according to the Wall Street Journal.

President Donald Trump discussed seizing Iran's Kharg Island in a Tuesday meeting and is leaning toward expanding military operations to include ground troops, a move that pushed Brent crude above $86 a barrel for the first time in a month.

"The export of oil and gas from the region will be either for everyone or for no one," Iran's Revolutionary Guard said Wednesday, as Tehran threatened to halt all Middle East energy exports in response to the reinstated U.S. naval blockade.

Brent crude traded at $85.50 a barrel early Wednesday after touching $86, a one-month high, while U.S. benchmark West Texas Intermediate hovered near $80. The price surge follows four consecutive nights of U.S. airstrikes that have killed at least 35 people and wounded more than 300 across Iran, according to Hossein Kermanpour, a spokesperson for the Iranian Health Ministry. The U.S. military said it struck dozens of targets including missile sites, drone positions and coastal defense systems.

Kharg Island handles roughly 90% of Iran's oil exports, or about 1.5 million barrels a day. Seizing the terminal would remove that supply from global markets at a time when the Strait of Hormuz — through which 21% of the world's oil trade passes — remains effectively closed. Trump has threatened to escalate further, telling Fox News the U.S. would hit Iranian power plants and bridges next week "unless they get to the table and negotiate."

The Kharg Island Calculus

Kharg Island, located in the northern Persian Gulf about 25 miles off Iran's coast, is the country's primary crude export terminal. The Wall Street Journal reported that Trump discussed the option in a meeting Tuesday, though no final decision has been made. Any ground operation to seize the island would represent the largest U.S. military ground commitment in the Middle East in decades and would require tens of thousands of troops, according to military analysts cited in the report.

The discussion comes as the U.S. has reimposed a naval blockade on Iranian ports, intercepting two commercial vessels within its first 17 hours, according to U.S. Central Command. The first blockade, which ran from April 13 to June 18, intercepted more than 140 vessels. The interim ceasefire deal signed in June has collapsed, with both sides trading daily strikes.

Oil Markets Under Pressure

The escalation has already tightened physical oil markets. Brent crude remains more than 15% above pre-war levels, though below the nearly $120 peak reached at the height of the conflict in early 2025. Shipping intelligence firm Kpler reported 56 confirmed incidents and 17 seafarer fatalities in the region, noting a "growing loss of confidence" in the southern route through the Strait of Hormuz that the U.S. had urged vessels to use.

IMF analysts warned Wednesday that the world's spare oil production capacity has been largely exhausted. "Much of that room has now been used up," Azim Sadikov and Jean-Marc Natal wrote in a blog post. "Unless inventories are replenished, the world will start from a weaker position when the next shock comes."

The U.S. Treasury separately sanctioned seven people and entities Wednesday for procuring weapons on behalf of Iran's Revolutionary Guard, including two Russian nationals. Treasury Secretary Scott Bessent said the administration would "continue to target and disrupt the illicit procurement networks that fund Iran's weapons programs and war machine."

Trump has given no deadline for Iran to negotiate, telling reporters Wednesday: "I don't like giving deadlines. But they pretty much know — they know the story. They better behave."

This article is for informational purposes only and does not constitute investment advice.