Ten days into the most consequential military confrontation in the Persian Gulf since the Iran-Iraq War, the balance of naval power in the region has been fundamentally and perhaps permanently altered. The United States has sunk or struck more than 20 Iranian warships. Iran's naval headquarters has been "largely destroyed," in President Trump's own words. The Iranian navy — the force that had threatened for years to close the Strait of Hormuz and hold the world's oil supply hostage — has, according to CENTCOM, been functionally eliminated from the Persian Gulf, the Strait of Hormuz, and the Gulf of Oman.

And yet the war is escalating, not ending. Iran's retaliation — more than 500 ballistic missiles and 1,000 drones in the first 48 hours, striking Gulf states that were not even belligerents — has exceeded US expectations. Kharg Island, the tiny terminal in the northern Persian Gulf through which 90% of Iran's crude oil exports flow, has been struck. Qatar's Ras Laffan — the world's largest LNG export facility — has been hit and halted. Saudi Arabia's Ras Tanura refinery, one of the biggest in the Middle East, shut down temporarily after an Iranian drone strike. The Strait of Hormuz, through which one-fifth of the world's oil flows daily, has come to a near standstill.

This is no longer a war being fought over Iran's nuclear programme, or Israel's security, or Trump's definition of American interests alone. It is a war being fought over the energy architecture of the 21st century — and every country that fills its tank, pays its electricity bill, or cooks its food with LPG is, whether it realises it or not, a stakeholder in its outcome.

The Naval War: From 9 Ships to "No Navy at All"

The naval dimension of Operation Epic Fury moved faster than almost any analyst predicted. When the US-Israeli strikes began on Saturday February 28, 2026, Iran's navy was a credible — if asymmetric — regional force. The Islamic Republic of Iran Navy (IRIN) and the IRGC Naval Forces together operated a fleet of frigates, corvettes, submarines, and hundreds of fast-attack craft specifically designed to swarm and overwhelm adversaries in the confined waters of the Persian Gulf and the Strait of Hormuz.

By Sunday March 1, Trump was posting on Truth Social: "I have just been informed that we have destroyed and sunk 9 Iranian Naval Ships, some of them relatively large and important. We are going after the rest. They will soon be floating at the bottom of the sea, also! In a different attack, we largely destroyed their Naval Headquarters."

US Central Command officials said that an Iranian Jamaran-class corvette was struck by US forces at the start of Operation Epic Fury, noting "the ship is currently sinking to the bottom of the Gulf of Oman at a Chah Bahar pier." The Jamaran-class corvettes are among Iran's most capable surface combatants — domestically built, equipped with anti-ship missiles, and designed specifically for operations in and around Hormuz.

By March 5, CENTCOM confirmed it had struck or sunk over 20 Iranian ships, with the US military saying there were no Iranian warships remaining in the Persian Gulf, the Strait of Hormuz, or the Gulf of Oman. In a separate action that carried the conflict into the Indian Ocean, the US torpedoed an Iranian naval ship in international waters in the Indian Ocean, with Sri Lanka's navy rescuing 32 people after receiving a distress call from the Iranian vessel IRIS Dena.

Trump stated the US had knocked out Iran's navy, air force, and telecommunications, and that the operation "had to be done" because the country was "very close to a nuclear weapon." The Pentagon added that Israel and the US would soon have complete control of Iranian skies.

Tehran's response to the loss of its navy was characteristically defiant. Iran warned the US would "bitterly regret" the torpedo attack on the IRIS Dena, and Iranian Foreign Minister Abbas Araghchi told NBC News that Iran had not asked for a ceasefire.

Kharg Island: The Oil Terminal That Could Change Everything

Of all the targets struck in the first ten days of Operation Epic Fury, none carries greater strategic weight than Kharg Island.

Kharg Island is the largest and most important hub through which roughly 90% of Iranian crude exports flow into world markets. It sits at the epicenter of global energy security during a moment of military escalation. The island has numerous loading berths, jetties, remote mooring points and tens of millions of barrels of crude storage capacity — handling export volumes exceeding 2 million barrels a day in recent years, almost entirely destined for Chinese refiners.

Explosions were reported on Kharg Island on Saturday February 28, according to Iran's semi-official Mehr news agency, though no further details were provided. Satellite imagery showed Iran continuing to load crude onto tankers at its Kharg Island terminal on Monday March 2, two days after the strikes — with one very-large crude carrier moored at a loading jetty — but no satellite coverage was available after that date, leaving the terminal's current status unclear.

The strategic calculus around Kharg is among the most consequential of the entire conflict. Approximately 90% of Iran's crude exports passed through this single point, with the majority destined for Chinese refiners. The near-total loss of that terminal would collapse Iran's oil export revenue stream almost entirely in the near term, creating a potential annual revenue shortfall exceeding $50 billion.

But the dilemma cuts both ways. Iran still has the option of destroying Kharg itself before US forces can seize it — a move that would send oil prices toward $120 per barrel and impose massive costs on the US, Gulf allies, and global markets, signaling a pain tolerance higher than Washington's. The question of whether Iran will sacrifice its primary revenue source to deny America strategic leverage is the most dangerous open variable in the conflict.

The Retaliation: Gulf Energy Infrastructure Under Fire

Iran's response to the destruction of its navy and the strikes on its leadership has been a broad, escalating campaign of drone and missile attacks across the Gulf — targeting not just US military installations but civilian and energy infrastructure across states that were not parties to the original conflict.

Saudi Aramco's Ras Tanura refinery — one of the world's largest oil refining complexes — was forced to halt operations after debris from intercepted Iranian drones caused a small fire. Qatar's Ministry of Defence reported that Iranian drones had targeted an energy facility in Ras Laffan belonging to QatarEnergy, the world's largest LNG producer. QatarEnergy shut down LNG production. Many downstream products including urea, polymers, methanol, aluminium, and others were also halted.

The halt in LNG production at Ras Laffan sent European gas prices surging to a three-year high, with Dutch front-month futures trading 45% higher.

A fire broke out at Mussafah Fuel Terminal in southwest Abu Dhabi after it was struck by a drone. Falling debris from a drone interception caused a fire at the Fujairah Oil Terminal along the eastern coast of the UAE. Multiple Iranian drones struck fuel tanks at the port of Duqm, Oman, with at least one direct hit on a fuel storage tank causing an explosion.

Iran's IRGC naval forces, even as their surface fleet was being systematically destroyed, continued threatening shipping. Iran declared the Strait of Hormuz closed. A security official warned that anyone attempting passage would be set on fire by IRGC heroes. Traffic through the strait slowed to a near-standstill, with 150 freight ships including many oil tankers stalled.

Since the US and Israel launched strikes, global crude oil benchmarks surged around 20%. Brent crude initially opened at $81.49 on March 2, pushing back close to $80 following news of the Ras Tanura strike. European gas prices surged 45%.

The Diplomatic Dimension: Pezeshkian's Apology, Larijani's Defiance

Iran's political response to the war has been internally contradictory — a sign of a regime whose chain of command has been severely disrupted by the killing of Khamenei and dozens of senior officials.

Iranian President Masoud Pezeshkian told Iran's neighbours that he respected their sovereignty, saying "We tried, with your help and through diplomacy, to avoid war" but that the "American-Zionist military attack left us with no option other than defending ourselves." He insisted that Iran's strikes had targeted only US military bases and facilities, not neighbouring countries' civilian infrastructure.

But within hours of the apology, Pezeshkian said Iran was attacking "legitimate targets" in Gulf nations, insisting the strikes were "exclusively against targets and facilities that are the origin and source of aggressive actions against the Iranian nation."

Meanwhile, Ali Larijani, secretary of Iran's Supreme National Security Council, posted that Trump must "pay the price" for the strikes. Trump dismissed him entirely: "I have no idea what he's talking about, who he is. I couldn't care less," telling CBS News that Larijani had "already been defeated."

The contradictions between Pezeshkian's apology and the continued drone strikes on Gulf states reflect what Pezeshkian himself acknowledged in a March 7 statement: apologising for strikes on neighbouring countries and attributing them to "miscommunication in the ranks," underscoring the limited control exercised by Iranian civilian leaders over the IRGC.

The Global Energy Shock: What It Means for India

For India, the combination of a closed Hormuz, a struck Kharg Island, and halted Qatari LNG production represents a near-worst-case energy security scenario that planners have war-gamed but hoped never to face.

India, with fewer strategic crude reserves and with only around nine to ten days of stocks, is more exposed to prolonged disruption than China. Roughly 40% of India's crude oil imports transit the Strait of Hormuz. So does a significant portion of India's LNG imports. The 10 million Indians working in the Gulf, who send home $50 billion annually in remittances, are now navigating a war zone.

The US Treasury moved to partially address India's crude supply crunch: the Treasury Department issued a 30-day waiver to allow Indian refineries to purchase Russian oil, previously under US sanctions. Treasury Secretary Scott Bessent described it as a "deliberately short-term measure" to enable oil to keep flowing into global markets.

This waiver — simultaneously an act of economic pragmatism and geopolitical leverage — effectively formalises what India had been doing informally: buying Russian crude at scale. But a 30-day waiver is not an energy security strategy. It is a breathing room measure for a conflict with no visible end date.

Trump ordered the US Development Finance Corporation to provide political risk insurance for maritime trade through the Gulf, and said the US Navy would escort ships if necessary. Lloyd's of London said it was "engaging constructively" with the Trump administration on the question, but analysts at JPMorgan warned that the DFC likely does not have the capacity to insure the more than 300 oil tankers currently anchored near the strait.

The Broader War: Hezbollah, Lebanon, and the March 8 Escalation

The naval and energy dimensions of the conflict exist within a broader regional war that is simultaneously being fought in Tehran, southern Lebanon, and the skies above the Gulf.

Israel authorised a ground invasion of Lebanon on March 3. Israeli forces struck the Ramada hotel in Beirut's seafront Raouche area on March 8, targeting what it described as "key commanders" in the Quds Force.

The US and Israel struck Iran's Assembly of Experts as they were meeting to elect Khamenei's successor. Israel also killed Daoud Alizadeh, the commander of the Quds Force's Lebanon branch, in Tehran, and detained a dozen Hezbollah members in response to a missile strike.

Debris from an airstrike damaged Golestan Palace, a UNESCO World Heritage Site, prompting UNESCO to issue a statement that damaging its property violates international law.

More than 1,300 people in Iran have been killed as a result of the ongoing fighting, according to the Iranian Red Crescent Society. The WHO identified 13 Iranian health infrastructure sites that had been struck.

Russia has been providing Iran with intelligence about targets, according to independent confirmation by NPR. China has sent an envoy to the Middle East urging both sides to return to negotiations, driven by concern over its own energy supply — one-third of China's crude oil comes from Persian Gulf countries through the Strait of Hormuz, and China buys 80% of Iran's crude oil exports.

Kharg Island's Future: Leverage, Destruction, or Stalemate?

The endgame of Operation Epic Fury remains genuinely unclear — which is itself a source of significant market anxiety. Trump has offered multiple, shifting rationales for the war: preventing Iran's nuclear weapons capability, protecting Israel, regime change by supporting the Iranian opposition, pre-empting an imminent Iranian attack. These goals require different levels of military action and imply different exit conditions.

The one strategic asset that could serve as both leverage and endgame is Kharg Island. Control it, and the US controls Iran's primary revenue stream. Destroy it (or allow Iran to destroy it), and the global oil market faces a supply shock of historic proportions.

The entire strategy of using Kharg as leverage rests on the assumption that the Iranians would rather accept American control over the terminal than destroy it themselves. Iran's leadership has just watched its Supreme Leader assassinated and dozens of senior officials killed. This is a regime that sees compromising core principles as more dangerous to its long-term survival than short-term devastation.

For now, the oil is still — just barely — moving. Satellites showed tankers at Kharg on March 2. The Strait has slowed but not fully stopped. The LNG from Ras Laffan has been suspended, but Qatar's reserves give it short-term flexibility. The world is operating on borrowed time in the Persian Gulf.

The war that began ten days ago with the killing of a supreme leader is now a conflict whose outcome will be measured not just in casualties and territorial control, but in whether the world's most important energy chokepoint remains open — and who gets to decide.

Key Takeaways

• Operation Epic Fury (US) and Operation Roaring Lion (Israel) began February 28, 2026; Khamenei killed on Day 1.
• The US has sunk or struck 20+ Iranian warships; no Iranian naval vessels remain in the Persian Gulf, Hormuz, or Gulf of Oman as of March 5; Iran's naval HQ "largely destroyed."
• The IRIS Dena was torpedoed in the Indian Ocean; 32 crew rescued by Sri Lanka.
• Kharg Island (handles 90% of Iran's crude exports) was struck on February 28; satellite imagery March 2 showed tankers still loading but no coverage since.
• Ras Laffan LNG (Qatar) halted production after drone strike; European gas prices surged ~45% to a three-year high.
• Ras Tanura (Saudi Aramco 550,000 bpd refinery) shut temporarily after Iranian drone debris; Fujairah, Duqm, Mussafah terminals also hit.
• Strait of Hormuz effectively closed: 150+ tankers stalled; crude up ~20%; insurance withdrawn.
• US Treasury issued a 30-day waiver allowing Indian refineries to buy Russian oil.
• Iran's retaliation hit US military bases in Kuwait, Qatar, Bahrain, Jordan, UAE; Iranian strikes also hit civilian hotels, airports, Amazon data centres.
• 1,300+ Iranians killed (Red Crescent); 6 US troops killed; Russia providing targeting intelligence to Iran; China urging ceasefire to protect its own energy supply.