Hormuz

President Trump’s decision to strike Iran creates new risks for a significant chunk of the world’s oil supply.

The Islamic Republic itself pumps about 3.3 million barrels a day, or 3% of global output, making it the fourth-largest producer in OPEC. But the nation wields far greater influence over the world’s energy supplies because of its strategic location.

Iran sits on one side of the Strait of Hormuz, the shipping lane for about a fifth of the world’s crude from key suppliers including Saudi Arabia and Iraq. While the waterway remains open, some oil tankers were avoiding sailing through following the attacks and ships were piling up on either side of the entrance, tracking data compiled by Bloomberg show.

Oil markets are closed for the weekend, and there was no initial information on whether the attacks on Iran and the country’s retaliatory strikes across the region Saturday targeted any energy assets.

Here are the pressure points to watch in oil as events unfold.

Iran’s production

Iran produces about 3.3 million barrels of oil a day, up from less than 2 million barrels a day in 2020 despite continued international sanctions. The country has become more adept at skirting these restrictions, sending about 90% of its exports to China.

The largest oil deposits are Ahvaz and Marun and the West Karun cluster, all in Khuzestan province.

Iran’s main refinery, built at Abadan in 1912, can process more than 500,000 barrels a day. Other key plants include the Bandar Abbas and Persian Gulf Star refineries, which handle crude and condensate, a type of ultra-light oil that’s abundant in Iran. The capital, Tehran, has its own refinery.

For Iran’s overseas shipments, the Kharg Island terminal in the northern Persian Gulf is the main logistical hub. There was an explosion on the island Saturday, according to Iran’s semiofficial Mehr news agency, which didn’t provide details or make any reference to the oil terminal.

Kharg Island has numerous loading berths, jetties, remote mooring points and tens of millions of barrels of crude storage capacity. The facilities have handled export volumes exceeding 2 million barrels a day in recent years.

U.S. sanctions discourage most potential buyers of Iran’s crude, but private Chinese refiners have remained willing customers, provided they get steep discounts. For international shipments, Iran relies on a fleet of aging tankers that mostly sail with their transponders deactivated to avoid detection.

Earlier this month, Iran was rapidly filling tankers at Kharg Island, probably in an effort to get as much crude on the water and move vessels out of harm’s way in case the facility was attacked. It was a move similar to last June ahead of Israeli and U.S. attacks.

Any strike on Kharg Island would be a desperate blow for the country’s economy.

Iran’s main natural gas fields are farther to the south along the Persian Gulf coast. Facilities at Assaluyeh and Bandar Abbas process, transport and ship gas and condensate for domestic use in power generation, heating, petrochemicals and other industries.

The area is the main point for Iran’s condensate exports. During the June war, an attack on a local gas plant sparked jitters among traders, but didn’t cause a lasting spike in oil prices because it didn’t affect any export facilities.

Regional Dangers

Iran’s Supreme Leader Ayatollah Ali Khamenei warned on Feb. 1 of a “regional war” if his country was attacked by the U.S. Tehran has claimed that a full closure of the Strait of Hormuz is within its power.

It would be an extreme step that the country has never taken but remains a nightmare scenario for global markets.

Hormuz is the chokepoint for bulk of the Persian Gulf’s exports of crude and also refined fuels such as diesel and jet fuel. Qatar, one of world’s biggest liquefied natural gas exporters, also relies on the strait. At least three gas tankers going to or from Qatar had paused voyages following the latest attacks in the region, according to ship-tracking data.

A seized South Korean-flagged tanker is escorted by Iranian Revolutionary Guard boats in the Persian Gulf’s Strait of Hormuz in January 2021. If Iran were to close the strait after the U.S.-Israel strikes Saturday, it would likely cause a massive disruption to exports and cause crude prices to spike.

(Tasnim News Agency via AP)

While OPEC members Saudi Arabia and the United Arab Emirates have some ability to reroute their shipments via pipelines that avoid Hormuz, closing the strait would still cause a massive disruption to exports and cause crude prices to spike.

There were signs that other Gulf producers were also accelerating shipments in February. Saudi Arabia’s crude shipments averaged about 7.3 million barrels a day in the first 24 days of the month, the most in almost three years. Combined flows from Iraq, Kuwait and the United Arab Emirates were set to climb almost 600,000 barrels a day from the same period in January, according to data from Vortexa Ltd.

In the past, Tehran has made retaliatory strikes on some of its neighbors’ energy assets. In 2019, Saudi Arabia blamed Tehran for a drone attack on its Abqaiq oil processing facility that halted production equivalent to about 7% of global crude supply.

Many observers say it’s improbable that Iran could keep Hormuz closed for long, making lower-impact actions like harassment of shipping more likely.

During last year’s war on Iran by Israel and the U.S., nearly 1,000 vessels a day were having their GPS signals jammed near Iran’s coast, contributing to one tanker collision. Sea mines are another long-threatened option for deterring shipping.

Market reactions

Oil surged the most in more than three years during the June war, with Brent crude rising above $80 a barrel in London. However, the gains quickly faded once it became clear that key regional oil infrastructure hadn’t been damaged.

Since then, concerns about an oversupply have dominated global markets, with crude in London ending 2025 about 18% lower than where it started.

Despite those fears of a glut, prices have surged 19% this year, partly due to fears of U.S. strikes on Iran.

With the main oil futures closed for the weekend, there’s limited insight into how traders are reacting to the latest attacks. However, a retail trading product, run by IG Group Ltd., was pricing West Texas Intermediate as high as $75.33, a gain of as much as 12% from Friday’s close.

Burkhardt and Di Paola write for Bloomberg. Bloomberg writer Julian Lee contributed to this report.

As the U.S. flows assets toward the Middle East, including the Gerald R. Ford Carrier Strike Group (CSG) now reportedly off the Moroccan coast, Iran, China and Russia will hold their recurring joint naval training exercise in the Strait of Hormuz, according to Iranian media. Moscow and Tehran see the Maritime Security Belt 2026 exercise as particularly relevant in light of current events, and there are reasons for the White House and Pentagon to take note. Having Russian or Chinese warships in these waters amid a U.S. attack on Iran could have military and political implications planners must address. At the same time, the timing of the still ongoing U.S. buildup and the exercise point to it having more of a messaging effect than an operational one.

The exercise, first held in 2019, is being hosted in the southern Iranian port city of Bandar Abbas, located on the Strait of Hormuz. Russian, Chinese, and Iranian naval units “are expected to participate with various ships and operational capabilities to test coordination, tactical readiness, and rapid-response procedures in the Strait of Hormuz,” the official Iranian Mehr news outlet reported.

U.S. Central Command (CENTCOM) declined to comment on the exercise.

As Iranian and Russian officials gathered Wednesday aboard the Russian corvette Stoiky, a top Iranian official issued a new threat against the growing U.S. Navy presence in the region, which includes the Abraham Lincoln CSG and at least eight other surface combatants. The Ford could arrive in the region in the next four or five days given its location posted by the MarineTraffic ship tracking website. The Navy said only that the ship is now in the Atlantic Ocean.

If the USS Gerald R. Ford keeps her current speed, she will be off the coast of Israel and be able to assist in the defense against an Iranian retaliation by Sunday morning. pic.twitter.com/7OhMJDRxwZ

— Oliver Alexander (@OAlexanderDK) February 18, 2026

“The Islamic Republic of Iran has faced threats, noise, propaganda and the presence of extra-regional fleets in West Asia for 47 years, Iran’s Navy Commander Rear Adm. Shahram Irani warned. “The presence of extra-regional fleets in West Asia is unjustified.”

“If the extra-regional fleet feels it has come with power, it should know that the Iranian people will confront them with greater power,” he added. “The faith of the people and missiles are the Islamic Republic of Iran’s deterrent weapons against the enemy.”

Nikolai Patrushev, a top aide to Russian President Vladimir Putin, framed the exercise as part of a larger struggle between the U.S. and the BRICS alliance, an informal group of 21 nations that includes Russia, China and Iran. Patrushev took aim at the ongoing U.S. and NATO efforts to seize tankers containing Russian oil as well as the ongoing tensions between Washington and Tehran.

“We will tap into the potential of BRICS, which should now be given a full-fledged strategic maritime dimension,” Patrushev posited. “The Maritime Security Belt 2026 exercises in the Strait of Hormuz, where Russia, China, and Iran [will send] their ships, proves to be relevant.”

Both Russia and Iran say the exercise will increase their ability to work together.

“The level of existing interactions and cooperation shows that we can manage and resolve many maritime and coastal issues together,” Captain First Rank Alexey Sergeev, commander of the Russian naval group, said, according to The Telegraph. “We are ready to hold joint exercises in any region, including specialised drills such as anti-maritime terrorism operations that will be executed with vessels and boats from both sides.”

Experts we spoke with say the presence of a small number of Russian and Chinese ships in the Strait of Hormuz and Gulf of Oman does not pose a significant threat to U.S. interests, but could complicate efforts to attack Iran. They also note that this exercise was likely planned months ago, well before U.S. President Donald Trump started threatening Iran over its harsh treatment of anti-regime protesters.

“I don’t believe it increases in any significant way the likelihood of conflict with Russia and China, but it probably would introduce additional considerations for any planned strikes against Iran,” Tom Shugart, an adjunct senior fellow at the Center for a New American Security (CNAS) think tank and a retired U.S. Navy submarine warfare officer told us Wednesday morning. 

“For starters, you’d want to make sure that their sensors don’t give advanced warning of your strike to the Iranians, and you’d want to make sure that those Russian and Chinese platforms aren’t in the way,” he explained. “You’d also of course want to ensure that there is no way they could be inadvertently struck a la USS Stark during the Iraq-Iran Tanker Wars of the 1980s.”

The Stark, an Oliver-Hazard Perry class guided-missile frigate, was hit by two Iraqi Exocet missiles while in the Persian Gulf on May 17, 1987. The strike killed 37 sailors and wounded 21 others.   

Shugart downplayed the timing of the exercise, given that its planning has been in the works for a while.

“I also don’t think that the small number of Russian and Chinese ships involved amount to much militarily relative to U.S. naval forces in the region – though their presence might matter politically, should the administration decide it wants to take military action against Iran,” he explained.

“I don’t think this fundamentally changes anything,” former CENTCOM commander Joseph Votel told us. “It is an easy way for Russia and China to show support after having abandoned Iran last summer.”

Votel, a retired Army General and current distinguished fellow at the Middle East Institute, was referring to last June’s U.S. Operation Midnight Hammer attack on Iranian nuclear facilities and Israel’s 12-Day War against Iran. 

How the Israel-Iran ‘12-day war’ unfolded

“Certainly the timing makes it seem more provocative,” Votel added. “There is likely also an internal message for regime supporters – pushing back on the U.S. and Israel.”

“I don’t think it raises the threat of conflict,” the former CENTCOM commander surmised. “I view it as a form of great power competition.”

The presence of Russian and Chinese ships near Bandar Abbas, a major center of Iranian military activity, could complicate U.S. targeting if they remain in the area. The coastal city would be a prime target to take out many types of kinetic capabilities, sensors, and other assets, especially Iran’s naval forces. Still, the Chinese and Russian ships should leave at some point and the U.S. would know their location and it doesn’t appear the U.S. is in a place to strike yet. Unless the exercise goes on for weeks, the Russian and Chinese ships will likely have moved on by the time all the pieces are in place for a U.S.-led kinetic operation to begin.

The joint naval exercise follows a more recently planned drill by the Iranian Islamic Revolutionary Guard Corps (IRGC), which has closed off the Strait of Hormuz for a live-fire exercise. It marks the first time Iran has shut parts of the Strait since Trump threatened Iran with military action in January.

Dubbed “Smart Control of the Strait of Hormuz,” the drills began Monday and include firing anti-ship cruise missiles at targets and IRGC naval drone and submarine units carrying out operations originating from the three Iranian islands, according to Iranian media.

“The armed drones used in the exercise—capable of engaging both air and sea targets—are among the IRGC Navy’s newest strategic platforms and are deployed in significant numbers, though their names and technical specifications remain classified,” the official Iranian FARS News outlet claimed.

We’ll have to wait and see how the exercises unfold, especially as the U.S. buildup fully matures. But at this time it seems that the presence of these vessels is more of a political factor than an operational one, at least for the time being.

Contact the author: howard@thewarzone.com