Khamenei's Hardline Son Appointed Iran's New Leader; Oil Surges

DUBAI/JERUSALEM (Reuters) - On Monday 9 March 2026, Iran named Mojtaba Khamenei to succeed his father Ali Khamenei as supreme leader, signalling that hardliners remain firmly in charge, while the week-old US-Israeli war with Iran sent oil prices surging and Asian stock markets into a nosedive.

Iranian institutions and politicians, from the foreign ministry to lawmakers, issued statements expressing their allegiance to the country's new supreme leader as the war entered its tenth day and fresh missile and drone strikes reverberated across the Middle East.

"We will obey the commander-in-chief until the last drop of our blood," a statement from the defence council said.

Senior cleric Ayatollah Sadeq Amoli-Larijani said Mojtaba Khamenei's appointment was "a balm for the spiritual suffering of our people and an emphasis on the need to continue the luminous path of the late Imam [Khamenei senior]."

Mojtaba's father, Supreme Leader Ali Khamenei, was killed in one of the first strikes launched against Iran more than a week ago.

The show of solidarity for Mojtaba comes after US President Donald Trump earlier rejected him as a candidate to be Iran's new supreme leader, and Israel saying it would target whoever leads Iran.

Mojtaba, a cleric with influence inside Iran's security forces and vast business networks under his father, had been viewed as a frontrunner in the lead-up to Sunday's vote by the Assembly of Experts, a body of 88 clerics tasked with choosing Ali Khamenei's successor.

The position gives Mojtaba the final say in all matters of state in the Islamic Republic.

Trump said on Sunday 8 March 2026 that Washington should have a say in the selection. "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.

"Hatred and fear"

Pope Leo on Sunday warned of "a tragedy of enormous proportions" due to the "widespread climate of hatred and fear” in Iran and across the region.

"Let us raise our humble prayer to the Lord that the roar of bombs may cease, that weapons may fall silent, and that space may be opened for dialogue in which the voices of peoples can be heard", Leo said at the Angelus prayer in St Peter’s Square.

The Israeli military said on Monday it had begun a wave of attacks in central Iran and had struck infrastructure belonging to Hezbollah militants in Beirut.

Iran and its proxies appeared to have launched attacks too, with rocket and drone strikes targeting a US diplomatic facility near Baghdad's international airport that were intercepted by C-RAM defence system, said police sources.

A drone strike targeted a US military base near Erbil airport in Iraqi Kurdistan, security sources said, while Saudi authorities reported intercepting a drone east of its northern Jawf region.

Thick smoke was seen rising from the direction of the Bapco oil refinery in Bahrain, according to a Reuters witness, after the government said an Iranian drone strike hit the area causing injuries and damage. Bapco Energies later declared force majeure on its group operations following the refinery attack, adding to fears about energy supplies from the region.

The US military reported a seventh American has died from wounds sustained during Iran's initial counter-attack a week ago, a day after Trump presided over the return to the United States of the remains of the six others killed.

The Israeli military said on Sunday that two of its soldiers were killed in southern Lebanon, marking the first fatalities among its troops since Israel-Hezbollah hostilities resumed last week as Israel intensified air strikes on Lebanon. The military did not immediately provide further details on the circumstances of the incident.

At least four people were killed when an Israeli strike hit an apartment in the Ramada hotel building in central Beirut early on Sunday, with Israel saying it targeted Iranian commanders operating in the Lebanese capital.

The US-Israeli attacks have killed at least 1,332 Iranian civilians and wounded thousands, according to Iran's UN ambassador.

Oil over $100 a barrel

Oil prices surged more than 25% on Monday to their highest levels since mid-2022, as major Middle Eastern oil producers cut supply because they cannot safely send shipments through the Strait of Hormuz to refiners worldwide.

Traffic through the Strait was largely closed after Iran attacked at least five ships, with a limited number of tankers transiting, choking off a key artery accounting for about 20% of global oil and LNG supply.

Brent crude futures were up $24.96 or 27% at $117.65 per barrel at 04:51 GMT (05:51 CET) - on track for the biggest-ever jump in a single day, while US West Texas Intermediate crude futures were up $25.72, or 28.3%, to $116.62.

The war has forced production stoppages by oil and gas exporters from Qatar to Iraq, with Kuwait announcing cuts over the weekend. Analysts predict the United Arab Emirates and Saudi Arabia will soon cut output as they run out of oil storage.

The G7 finance ministers will discuss on Monday a joint release of oil from emergency reserves coordinated by the International Energy Agency, the Financial Times reported. Three G7 countries, including the US, have so far expressed support for the idea, the FT added.

A senior Japanese parliament member said on Sunday that the government instructed a national oil reserve storage site to prepare for a possible release of crude. Japan relies on the Middle East for around 95% of its crude, with roughly 70% shipped through the Strait of Hormuz.

The spike in oil prices weighed on stock markets in Asia, with Japan's Nikkei down 5.8% and import-reliant South Korea falling 6.5%.

Additional information: Oil pares gains but still on track for record surge as Iran war escalates

SINGAPORE (Reuters) - Oil prices came off earlier highs on Monday but were still up more than 15% at levels not seen since mid-2022 as some major producers cut supplies and fears of prolonged shipping disruptions gripped the market due to the expanding US-Israeli war with Iran.

Brent crude futures were up $15.51, or 16.7%, at $108.20 per barrel at 06:42 GMT (07:42 CET) - on track for the biggest-ever jump in a single day, while U.S. West Texas Intermediate (WTI) crude futures were up $14.23, or 15.7%, at $105.13.

Disruptions in tanker movements and rising security risks have already slowed shipping activity, and left Asian buyers reliant on Middle Eastern crude especially vulnerable because the crisis is unfolding around the Strait of Hormuz, through which roughly one-fifth of the world's oil supply passes.

WTI surged 31.4% to a session high of $119.48 a barrel earlier on Monday, while Brent rose as much as 29% to $119.50 a barrel. Before the surge on Monday, Brent had already climbed 27% and WTI by 35.6% last week.

Prices pared gains after the Financial Times reported that the Group of Seven (G7) finance ministers and the International Energy Agency will discuss on Monday a joint emergency oil reserves release, and Saudi Aramco offered prompt crude supply through a series of rare tenders.

"Unless oil flows through the Strait of Hormuz resume soon and regional tensions ease, upward pressure on prices is likely to persist," said Vasu Menon, managing director for investment strategy at OCBC in Singapore.

Iraq and Kuwait have begun cutting oil output, adding to earlier liquefied natural gas reductions from Qatar, as the war blocked shipments from the Middle East. Analysts expect the United Arab Emirates and Saudi Arabia will have to also cut output soon as they run out of oil storage.

Refinery disruptions continued due to escalating tensions in the region, with Bahrain's BAPCO announcing a force majeure following a recent attack on its refinery complex.

Fujairah Media Office said a fire broke out in the UAE's Fujairah oil industry zone resulting from debris falling, with no injuries reported. Saudi Arabia's Defence Ministry said on X it intercepted a drone heading to the Shaybah oilfield.

Also boosting prices is the appointment of Mojtaba Khamenei to succeed his father Ali Khamenei as Iran's supreme leader, signalling that hardliners remain firmly in charge in Tehran a week into its conflict with the United States and Israel.

"With the appointment of the late leader's son as Iran's new leader, US President Donald Trump's goal of regime change in Iran has become more difficult," said Satoru Yoshida, a commodity analyst with Rakuten Securities. "That view accelerated buying, as Iran is expected to continue its closure of the Strait of Hormuz and attacks on other oil-producing nations' facilities, as seen last week," he said, predicting WTI could rise to $120 and then $130 a barrel in a relatively short period.

Weeks or months of higher fuel prices?

The war could leave consumers and businesses worldwide facing weeks or months of higher fuel prices even if the week-old conflict ends quickly, as suppliers grapple with damaged facilities, disrupted logistics and elevated risks to shipping.

"The next flag will be whether it eventually gets to a point where they have to start shutting in oil wells, which not only impacts output even further, it delays a response once the conflict eases as well. That would potentially sustain those prices for much longer," said Daniel Hynes, senior commodity strategist at ANZ.

Iraqi oil production from its main southern oilfields has fallen by 70% to just 1.3 million barrels per day as the country is unable to export oil via the Strait of Hormuz due to the Iran war, three industry sources said on Sunday. Crude storage has reached maximum capacity, said an official with the state-run Basra Oil Company.

Kuwait Petroleum Corporation began cutting oil output on Saturday 7 March 2026 and declared force majeure on shipments, though it did not say how much production it would shut.

Israel's military has threatened to kill any replacement for the deceased Ali Khamenei, while Trump said the war might only end once Iran's military and rulers had been wiped out.

Meanwhile, as oil prices surged, US Senate Democratic Leader Chuck Schumer called on Trump to release oil from the Strategic Petroleum Reserve (SPR). "President Trump should release oil from the SPR now to stabilise markets, bring prices down and stop the price shock that American families are already feeling thanks to his reckless war," Schumer said in a statement.