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US President Donald Trump said Monday that attacking oil infrastructure on Iran's Kharg Island remains an option following earlier US strikes on military targets at the location.

Speaking at the White House, Trump said the US could destroy the oil facilities within five minutes but has held back for now to preserve the possibility of rebuilding the country in the future. He added that this decision may change.

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On Friday, Trump announced that the US had bombed military targets on Kharg Island while avoiding its oil infrastructure. He warned Iran's leaders that he would reconsider this approach if they interfered with ships passing through the Strait of Hormuz. The strait has been effectively closed since the US-Israel war on Iran began late last month.

Trump said the US destroyed everything on the island except the area containing oil infrastructure, which he referred to as "the pipes." He stated that while the US did not want to target these facilities initially, it would do so if necessary.

The president also said the US destroyed Iran's mine-laying ships, a move he indicated would help reopen the Strait of Hormuz. About 20% of the world's energy supplies pass through this waterway.

Trump said he expects the strait to reopen soon and repeated his request for other nations to help secure the passage. He noted that some countries have told him they are prepared to assist, with varying levels of enthusiasm.

Kharg Island is located approximately 25 kilometers off Iran's coast and handles about 90% of Iran's crude oil exports, with most shipments going to China.

Iran exports roughly 1.3 million to 1.6 million barrels per day, with the majority leaving through Kharg Island. A strike on the facility would likely remove those barrels from the market.

Iran-US talks conclude, technical discussions scheduled for next week

U.S.-Iran talks over Tehran’s nuclear ambitions concluded on Thursday with no clear deal being inked. 

But both sides signaled that they will resume negotiations soon, with technical-level discussions also set to take place next week in Vienna, mediator Oman said. 

Tensions over Iran were a major driver of oil prices in February, especially as the U.S. amassed a major military force in the Middle East and threatened action

“Oil supply could be anywhere between 10mb/d lower or 1mb/d higher than current levels, depending on the outcome of current peace talks,” ANZ analysts said in a note. 

“However, the Strait of Hormuz is the focus. Anything short of sustained disruption to oil supplies in that waterway would likely see only temporary rallies in the oil price,” ANZ analysts said, adding that the Organization of Petroleum Exporting Countries was likely to release more production to offset supply disruptions. 

The Strait of Hormuz is a key shipping channel in the Middle East, with Iran controlling the northern coast of the crossing. Any major conflict with the country is likely to disrupt shipping through the channel. 

Venezuela oil sales set to ramp up under US agreement 

Oil sales under a recent supply deal between the U.S. and Venezuela are expected to reach $2 billion by end-February, U.S. officials said on Thursday. 

This comes after Washington took control of Venezuela’s oil industry at the beginning of the year with President Nicolas Maduro’s capture by U.S. forces. 

Since then, Venezuela has ramped up domestic production, with global trading houses Vitol and Trafigura also marketing a bulk of the country’s oil. Several buyers in Asia and Europe, including key oil consumer India, are set to receive Venezuelan oil in the coming weeks. 

Venezuela’s return marks a sharp increase in global oil supplies– a trend that could pressure crude in the coming months. Fears of a supply glut in 2026 were a major weight on crude in recent months. 

 

Crude oil prices were on course for their first weekly increase after three consecutive weekly losses, following President Trump’s latest threat to Iran that gave the country 10-15 days to make a deal or “really bad things” would happen.

At the time of writing, Brent crude was trading at $72.08 per barrel, with West Texas Intermediate at $66.89 per barrel, both up after hitting their highest levels in six months on Thursday after Trump’s threat.

“With a deal looking increasingly difficult to reach, it also means it will be more challenging to find a route to de-escalation, especially following the US military build-up we have seen in the region,” ING commodity strategists said in a note on Thursday. “And if de-escalation is not possible, the key question will then be what type of action the US takes and how Iran responds to this,” Warren Patterson and Ewa Mathey added.

The prospect of an oil supply disruption in Iran remains uncertain. “Market focus has clearly shifted to escalating Middle East tensions after the failure of multiple rounds of U.S.-Iran nuclear talks, even as investors debate whether any actual disruption will materialise,” Philip Nova analyst Priyanka Sachdeva said, as quoted by Reuters.

Bloomberg, meanwhile, noted that last year, President Trump had also indicated he wanted to go the diplomatic way but quickly reconsidered and ordered strikes on Iran, carried out by the United States and Israel together.

In further fuel for oil prices, the latest talks between Russia and Ukraine ended with no visible progress towards peace, making the prospect of sanction removal for Russia’s oil industry more distant.

Meanwhile, physical oil markets are suggesting that the oversupply assumptions may have been exaggerated. “The shape of the ICE Brent forward curve continues to suggest that the market is tighter than what many analysts have been expecting, including us,” ING’s Patterson and Manthey said in their note, adding that said market was in backwardation for both this year and next.

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