The U.S. military struck more than 90 Iranian military targets on Kharg Island on Friday, hitting the nerve center of Iran’s oil export network while deliberately sparing the petroleum infrastructure that generates roughly $78 billion a year in revenue for Tehran. Oil prices surged past $100 per barrel for the second consecutive day as markets weighed the risk of further escalation in the Persian Gulf.
President Donald Trump announced the strikes on Truth Social, claiming U.S. forces had “destroyed 100% of Iran’s Military capability” on the island. He said he chose not to target oil facilities for humanitarian reasons but warned he would “immediately reconsider” if Iran interfered with commercial shipping through the Strait of Hormuz.
What Was Targeted on Kharg Island
U.S. Central Command confirmed the precision strikes destroyed naval mine storage facilities, missile storage bunkers, air defense systems, a naval base, and airport installations. The operation is part of the broader campaign known as “Operation Epic Fury,” which Defense Secretary Pete Hegseth said has now struck more than 15,000 combined U.S.-Israeli targets since the conflict began in late February.
Kharg Island sits roughly 15 miles off Iran’s southern coast in the Persian Gulf and is about one-third the size of Manhattan. The island’s deep-water ports handle approximately 90% of Iran’s crude oil exports, making it the single most important piece of economic infrastructure in the country. Most of Iran’s coastline cannot accommodate the large tankers needed for international oil trade, which means no other Iranian port can replicate Kharg’s capacity.
Oil Markets React as Prices Hold Above $100
Brent crude futures closed at $103.14 per barrel on Friday, up 2.67%. West Texas Intermediate settled at $98.71, gaining 3.11%. Both benchmarks have now climbed more than 40% since the conflict with Iran began. The International Energy Agency characterized the disruption as the “largest supply disruption in the history of the global oil market.”
U.S. gasoline prices have risen to an average of $3.68 per gallon, the highest level in more than 18 months. The Trump administration temporarily lifted sanctions on Russian oil already at sea in an effort to bring more supply into the market, but that move failed to push prices meaningfully lower.
Iran Threatens Retaliation Against Regional Oil Infrastructure
Iran’s armed forces issued a direct warning in response to the strikes: “If this happens, all oil and gas infrastructure in the region in which the U.S. and its allies have interests will be set on fire and destroyed.” Iran has already launched drone attacks on oil terminals in the United Arab Emirates and has repeatedly threatened to close the Strait of Hormuz, through which roughly one-fifth of global oil supplies pass daily.
Eight maritime workers have been killed in attacks on commercial vessels in the Persian Gulf over the past two weeks, with four others still missing. Some oil-loading operations at the UAE hub of Fujairah were suspended on Friday after a fire, according to Reuters.
What This Means for the U.S. Economy
The oil price surge is compounding an already fragile economic picture. Goldman Sachs raised its 12-month recession probability to 25% this week after February payrolls contracted by 92,000 jobs and rising costs continued to squeeze businesses. The S&P 500 posted its first three-week losing streak in a year, falling to a new 2026 low. Wall Street strategist Ed Yardeni put the probability of stagflation at 35%, with a 15% chance of a repeat of 1970s-style conditions.
For small businesses and startups, the ripple effects are immediate. Higher energy costs raise the price of shipping, manufacturing, and raw materials. The Federal Reserve, which left rates unchanged at 3.5% to 3.75% in January, now faces a dilemma: cutting rates could fuel inflation that is already running at 2.8% on the core PCE measure, while holding steady risks deepening a slowdown. Traders have pushed back expectations for the next rate cut to mid-2027.
Trump called on China, France, Japan, South Korea, and the United Kingdom to send naval vessels to help protect commercial shipping lanes in the Gulf. Whether those nations respond could determine how long the disruption lasts and how high energy prices climb in the months ahead.
