Essentially all oil exports from Iran pass through the strategically important island of Kharg, which the US bombed on Saturday night.
Attack on Saudi?
President Donald Trump says all military targets on the island have been destroyed and threatens to strike oil infrastructure if ships are not allowed to pass through the Strait of Hormuz.
The island is incredibly important for Iran's oil exports. What is worrying now is what this attack will lead to and what the aftereffects will be, says Christian Kopfer, commodities analyst at Handelsbanken.
Kopfer believes that an Iranian response could have devastating consequences for all oil exports in the region, which could lead to skyrocketing gasoline and diesel prices.
The difficult thing is to think several steps ahead. How will Iran act? There is a risk that they will attack oil-critical infrastructure that they believe is allied with the US; it could be in Saudi Arabia. And that is the most important producer in the entire region, he says.
If this escalates into attacks on refineries, it could have major consequences for energy policy.
“It could get worse and worse”
The American bank JP Morgan has said that an attack on Kharg means that Iran's ability to export crude oil will be drastically reduced and that it will likely lead to a response in the Strait of Hormuz, where Iran is banning ships carrying crude oil from countries that participated in the war from passing through.
It could get worse and worse. But for now, it's all about opening up the strait for safe passage, says Christian Kopfer.
