• Iran has the world’s second-largest gas reserves and third-largest crude oil reserves, according to various estimates
• Iran holds over 208 billion barrels of proven crude reserves and nearly 34 trillion cubic meters of proven gas reserves, according to OPEC and GECF data
• Kharg Island, South Pars and Strait of Hormuz remain central to the country’s production and exports

ISTANBUL

Iran’s energy sector has returned to the center of attention as US President Donald Trump has openly suggested seizing Iran’s oil infrastructure, signaling a potential shift in Washington’s objectives in the conflict.

“My favorite thing is to take the oil in Iran,” he told the Financial Times over the weekend, adding that Kharg Island – Iran’s primary export terminal – could be among the targets under consideration.

The comments have sharpened attention on Iran’s energy system, a heavily concentrated export network that plays a major role in global oil supply and price stability.

Iran sits on one of the world’s largest hydrocarbon reserves, making any threat to its production or export chain a broader concern for global energy security.  

Major global player

Iran was the fourth-largest crude oil producer in the Organization of the Petroleum Exporting Countries (OPEC) in 2023, while its dry natural gas production was the third-largest globally in 2022, according to the US Energy Information Administration (EIA).

The EIA also ranked Iran as “the world’s third-largest oil and second-largest natural gas reserve holder in 2023.”

According to OPEC, Iran held 208.6 billion barrels of proven crude oil reserves at the end of 2024.

The Gas Exporting Countries Forum (GECF) estimates its proven natural gas reserves at about 33.9 trillion cubic meters.

The country pumps about 4.5% of global oil supplies and produces about 3.3 million barrels per day of crude, in addition to around 1.3 million barrels per day of condensate and other liquids.    

Why does Trump want to seize Kharg Island?

Iran’s export chain is tightly linked to a small number of terminals and one critical maritime chokepoint.

Kharg Island is Iran’s largest and most strategically important crude export terminal. The bulk of the country’s oil exports pass through Kharg before transiting the Strait of Hormuz, one of the world’s most critical energy corridors, which carries about 90% of Iran’s crude shipments.

The importance of Hormuz extends far beyond Iranian cargoes alone. Any disruption at Iranian terminals, or to traffic through the strait, could quickly escalate into a wider regional and global supply shock, affecting energy flows across the Gulf, as was seen over the past month.

The terminals at Kharg, Lavan and Sirri islands handle almost all of Iran’s crude oil exports, according to the US Energy Information Administration. Meanwhile, Assaluyeh serves as the key loading point for condensate from South Pars as well as LPG, sulfur and petrochemical shipments.

While Iran’s export system remains heavily concentrated in Gulf-facing infrastructure, it has also tried to develop alternative export routes, with the Goreh-Jask pipeline and Jask terminal project designed to create the country’s first oil export outlet east of the Strait of Hormuz.  

Domestic gas consumption

Roughly 94% of the gas Iran produces is consumed domestically.

GECF data shows Iran produced about 276 billion cubic meters of usable natural gas in 2024. Most of it – 260 bcm – was used at home while a smaller portion – around 16 bcm – was exported through pipelines.

That heavy domestic reliance means any disruption to gas infrastructure could affect not only exports, but also electricity supply, industrial activity and household consumption inside the country.  

Who buys Iranian oil and gas?

Iran’s crude oil and condensate exports remained heavily concentrated in a small number of destinations in 2023, with China by far the dominant buyer.

Iran exported about 1.2 million barrels per day to China, 85,540 bpd to Syria, 42,110 bpd to the UAE, and 26,780 bpd to Venezuela in 2023, according to EIA figures.

Those figures imply China accounted for about 89% of Iran’s crude oil and condensate exports that year, followed by Syria at roughly 6%, the UAE at around 3%, and Venezuela at about 2%.

The agency said Iran’s crude oil and condensate exports have been rising steadily, increasing to about 1.5 million barrels per day in the first eight months of 2024, up from around 1.4 million bpd in 2023.

The agency noted that many shipments listed under other or unknown destinations are likely headed to China, suggesting its actual share is even higher than the official data indicates.  

Refining capabilities​​​​​​​

Iran’s refining system has shown resilience under sanctions and supply stress.

According to EIA, Iran’s total crude oil distillation and condensate splitter capacity stood at more than 2.4 million bpd as of 2020, following years of investment aimed at reducing dependence on imported fuels.

The capacity of the Persian Gulf Star condensate refinery, on the outskirts of the southern port city of Bandar Abbas, was raised to about 420,000 barrels per day in early 2020, helping Iran expand gasoline production and improve self-sufficiency in petroleum products.