Oil shock to worsen should US-Israel seize Iran's Kharg Island, JP Morgan says

Core Viewpoint - JP Morgan indicates that if the U.S. and Israel were to seize Iran's Kharg Island, Iran's oil exports would cease and production would be halved, leading to severe retaliatory actions from Tehran against regional oil infrastructure [1]. Oil Export and Production Impact - A direct strike on Kharg Island would halt the majority of Iran's crude exports, which account for approximately 4.5% of global oil supplies, equating to about 3.3 million barrels per day of crude and 1.3 million barrels per day of condensate and other liquids [1]. - Iran has ramped up its oil exports from Kharg to near record levels, loading over 3 million barrels per day from February 15-20, significantly higher than its normal export pace of around 1.3 to 1.6 million barrels per day [1]. Historical Context - Historical precedents show that during the 1979 Iran hostage crisis and the 1980s Iran-Iraq Tanker War, U.S. administrations refrained from attacking Kharg Island, focusing instead on protecting shipping and targeting Iranian vessels [1]. - The island has a storage capacity of approximately 30 million barrels, with around 18 million barrels currently stored, which would last about 10-12 days of exports under normal conditions [1]. Market Reaction - Oil prices surged to $119 per barrel as production cuts in the Middle East affected multiple countries, including Iraq, Kuwait, Saudi Arabia, and the United Arab Emirates [1].