Iran named Mojtaba Khamenei to succeed his slain father as supreme leader on Monday, signaling that hardliners remain firmly in charge and appearing to close off any path to a swift end to war in the Middle East.
The prospect that the disruption to global energy supplies - already one of the most severe in history - could last longer than previously expected sent oil prices surging in record leaps and global stock markets went into a nosedive.
Khamenei, 56, a cleric with a power base among the security forces and their vast business empire, has been declared unacceptable by US President Donald Trump, who has demanded Iran's unconditional surrender.
IRAN'S POLITICAL SYSTEM RALLIES BEHIND MOJTABA
Iran's political system rallied around the new supreme leader, with politicians and institutions issuing strongly worded pledges of loyalty. Public processions to take loyalty vows were announced for later on Monday.
"We will obey the commander-in-chief until the last drop of our blood," a defense council statement said.
Mojtaba's father, Supreme Leader Ali Khamenei, was killed in one of the first strikes against Iran more than a week ago.
Mojtaba had been viewed as a frontrunner before Sunday's vote by the Assembly of Experts, a body of 88 clerics tasked with choosing the new supreme leader, who has the final say in all matters of state.
Despite public vows of loyalty, Iranian society remains deeply divided. Many Iranians publicly celebrated the elder Khamenei's death, weeks after his security forces killed thousands of anti-government protesters in the worst domestic unrest since the era of Iran's 1979 revolution.
But there has been little sign of anti-government activity during the bombing campaign. Activists say it would be unsafe to take to the streets while the country is under attack.
Israel says its war aim is to overthrow Iran's system of clerical rule. Washington was initially more circumspect, saying its aim was to destroy Iran's missile capabilities and nuclear program, although Trump ratcheted up his demands by also demanding the installation of a compliant Iranian government.
Israel had said it would kill whoever succeeded the elder Khamenei unless Iran ended its hostile policies. Trump repeated his demand on Sunday that Washington have a say in the selection of the new supreme leader.
"If he doesn't get approval from us, he's not going to last long," he told ABC News, adding that ending the war would be a "mutual" decision with Israeli Prime Minister Benjamin Netanyahu.
In an interview with the Times of Israel after the new supreme leader was named, Trump declined to respond, saying only "We'll see what happens," according to the newspaper.
OIL SURGES PAST $100 A BARREL
The war has effectively shut the Strait of Hormuz, where a fifth of global oil and seaborne liquefied gas is shipped near the Iranian coast. With tankers unable to sail for over a week, producers have run out of storage and are being forced to halt pumping.
Brent crude futures were up 12.5% at $104.30 per barrel at 1017 GMT, having earlier shot as high as 119.50, on track at one point for the biggest jump in a single day.
The prospect of a prolonged energy crisis - reviving memories of the Middle East oil shock of the 1970s - sent share markets in Asia and Europe into a tailspin, which futures showed was likely to reach Wall Street when it opens on Monday.
The price of gasoline has huge political resonance in the United States, where Trump's Republicans hope to keep control of Congress in midterm elections in November. He won re-election in 2024 after pledging to end foreign wars and cut the cost of living.
"Short-term oil prices, which will drop rapidly when the destruction of the Iran nuclear threat is over, is a very small price to pay for USA, and World, Safety and Peace," Trump posted on Truth Social on Sunday night. "ONLY FOOLS WOULD THINK DIFFERENTLY!"
Tehran was choked in heavy black smoke from strikes that hit an oil refinery, an escalation in attacks to target Iran's domestic energy supplies which appeared to trigger attacks on Washington's Gulf Arab allies.
Thick smoke rose from a huge refinery in Bahrain, where state oil company Bapco declared force majeure after it was struck overnight.
The Israeli military said on Monday it had launched attacks in central Iran and struck the Lebanese capital Beirut, where Israel has extended its campaign after the Iran-backed Hezbollah fired across the border.
The US military reported a seventh American had died from wounds sustained during Iran's initial counter-attack a week ago.
Israel's military said on Sunday two of its soldiers were killed in southern Lebanon, the first fatalities among its troops since Israel-Hezbollah hostilities resumed.
At least four people were killed in an Israeli strike on an apartment in the Ramada hotel building in central Beirut early on Sunday. Israel said it had targeted Iranian commanders operating in Beirut.
The US-Israeli attacks have killed at least 1,332 Iranian civilians and wounded thousands, according to Iran's UN ambassador. Lebanon has reported scores of people killed there.
In Israel, ambulance workers said one man was killed from shrapnel wounds at a construction site on Monday, raising to 11 the death toll in Iranian strikes.
