Oil prices top $100 as Trump threatens strikes on Iran's Kharg Island

Global oil benchmarks climbed above $100 a barrel as reports that the U.S. had struck targets around Kharg Island and President Donald Trump threatened to hit Iran's crude export infrastructure sent risk premia sharply higher. Traders reacted to the prospect that damage to Kharg — a hub for most Iranian exports — could materially curb flows to market.

The move unfolded after U.S. statements and regional reports pointed to strikes or military activity near Kharg Island, and senior administration comments signaled that striking Iran's export facilities was on the table. JPMorgan (JPMorgan Chase) warned that a direct hit on Kharg or a prolonged disruption to the terminal would likely trigger a severe oil shock, with substantial upside for prices if exports were curtailed.

Markets priced in a higher supply-risk premium almost immediately: Brent and WTI futures registered double-digit percentage moves intraday as traders re-assessed spare capacity and shipping risk. Refining margins and retail fuel expectations were also repriced higher, reflecting the potential for tighter product markets if crude shipments from the Gulf are interrupted.

The episode underscores how geopolitical escalation in the Middle East can swiftly transmit into global energy markets. Kharg Island's role as a primary export terminal for Iran means that any substantial damage or closure would not only reduce Iranian exports but could force buyers to seek alternative cargoes, reroute tankers and absorb higher insurance and logistics costs. Regional naval and maritime notices will be watched closely for signs of wider disruption.

Analysts say volatility is likely to remain elevated and that the market will be sensitive to three near-term developments: the extent of damage to Kharg, any Iranian retaliation targeting shipping or infrastructure, and diplomatic efforts to de-escalate. JPMorgan's assessment frames the risk as far more than a headline move — a sustained supply shock remains a key tail risk that could keep prices structurally higher until credible assurances about export routes are restored.