Iran Names Mojtaba Khamenei Supreme Leader, No ‘Regime Shift’ Nor Power Shift on Cards

• Iran names Mojtaba Khamenei supreme leader after Ali Khamenei death.
• Oil prices surge near $120 amid fears of prolonged conflict.
• Iranian missile attack kills one person in central Israel.
• Saudi Arabia intercepts Iranian drones and missiles targeting key facilities.

As Markets are rocked by war, Iran designates Mojtaba Khamenei Leader. On Monday, Iran declared that its new Supreme leader was Mojtaba Khamenei after the death of his father when Ayatollah Ali Khamenei had in recent U.S.-Israeli airstrikes, another major milestone in the conflict that the new UAE leader is meant to defy and the financial market in different parts of the world is shaken.

The Islamic Republic had Mojtaba Khamenei chosen as a senior Shiite cleric despite warnings by U.S President Donald Trump that such an appointment was unacceptable. The move puts the younger Khamenei one who has long been regarded as an influential presence in the Iranian political and religious institution in the midst of a war that has already shaken the region and driven the energy prices skyrocketing.

This appointment also unites the power of the hard-line elements of the Iranian society like the Islamic Revolutionary Guards Corps that is expected to be at the centre of determining the Tehran strategy in the current conflict. Premiers of Iranian military and political hard-liners hurriedly took an oath of allegiance to the new leader.

Simultaneously, there were signs of opposition within Iran with some defiant voices being heard screaming a derogatory phrase, Death to Mojtaba out of windows in certain parts of Tehran. The change of leaders was triggered by the reactions of the global markets which were nervous about the growing war. Oil prices momentarily shot up to almost 120 per barrel the highest price since the pandemic and then fell later in the trading period as investors evaluated the potential of long-term oil supply shocks.

Brent crude, which had earlier in the day advanced to highs on overheating and fell out of highs at dawn, was trading on Monday at approximately 103 per barrel, though analysts predicted that prices would rebound once more in case shipping through the Strait of Hormuz was again destabilized. International equity markets also fell since the investors shifted to risky assets. Pan-European Stoxx Europe 600 index declined by over 2 percent in the initial trading, with Germany and Britain FTSE 100 declining by more than 1.5 percent each. Asian markets also dwindled down fairly earlier in the day.

Violence Spreads in Middle East

Iran-United States and Israel war have continued to rage in the region with the last 24 hour reports of executing missile and drone attacks in various countries. Iran made further attacks against Israel and allies of the U.S in the Persian Gulf, whilst Israel extended its military campaigns against Hezbollah in Lebanon. Monday morning, one person was killed in Israel in a missile attack according to the Israeli emergency service Magen David Adom.

Saudi Arabia claimed that it had intercepted multiple incoming attacks overnight, including drones that targeted northern Riyadh as well as ballistic missiles that targeted a Saudi air base. The defence ministry of the kingdom also reported that its air defence prevented attacks meant to destroy the Shaybah oil field that is one of the largest energy plant of the country.

In the meantime, Iran was reported to strike Bahrain in the Sitra region of the capital Manama using drones. The health ministry of the country reported the injury of 32 individuals among them some were children and an infant. Diplomatic evacuations have also been triggered by the rising conflict in the region.

Reported attacks outside the American embassy in Saudi Arabia prompted the U.S. State Department to evacuate the American embassy of the country and family members and nonessential staff. The war started on 28th February with organized U.S and Israeli airstrikes on Iranian targets. This has since resulted in hundreds of people being killed as the fighting expanded into Lebanon and the Gulf.

On Monday, the parliament of Lebanon declared that it would delay the held national elections due in May by two years because of the insecurity situation occasioned by a war that pitted Israel against Hezbollah the Iran trained militant group. Operation in southern Lebanon by Israeli forces has shifted its activities against what they believe to be Hezbollah infrastructures as it attempts to build a buffer zone on the border.

Affected Energy Markets and Global Economies

The expansion of the war has caused significant disturbances within the energy markets as traders are worried that shipments via Strait of Hormuz might be extremely limited as a major route of oil exports in the world. The supply of oil to the world market is usually influenced by the narrow waterway that connects the Persian Gulf to the rest of the world, almost a fifth of the whole oil supply in the world.

There may be severe side effects to energy prices and world inflation in case of any prolonged derailment. RBC Capital Markets analysts have cautioned that the unpredictability of the period of the conflict is making it harder to predict the market. The analysts wrote that it is difficult to predict whether this is going to be a multi-week or multi-month struggle since the word winning is not clearly defined. Political leaders from a number of countries have been concerned with the financial implications of the long-term instability in Middle East.

British Prime Minister Keir Starmer added that “the longer the war lasts, the more economic input the economies relying on imported energy will have”. He said that “the British government is collaborating with other world powers to alleviate the impact of escalating fuel costs and supply problems on the economy”. Russia has not been left behind in responding to the change of leadership in Tehran. Vladimir Putin, the President of Russia, congratulated Mojtaba Khamenei on his appointment and reiterated that Moscow was in the support of Iran in the growing conflict.

Putin in a statement reiterated “our absolute support to Tehran and that we are standing with our Iranian friends”. In recent years Russia and Iran have grown closer to each other in regards to their strategic alliance, especially in the aftermath of the invasion of Ukraine by Moscow. The instability has also been evolving into the civilian infrastructure and diplomatic relations within the region.

The conflict and recent attacks around its facilities caused Bahrain to declare force majeure on its operations in its refinery complex. Meanwhile, campaigners of human rights and sports organizations have expressed concern of the national women soccer team of Iran, which plays in one of the matches in Australia, the safety of the team after the players allegedly refused to sing the national anthem. With the military campaigns maintained on several fronts and the global markets rather unstable, governments and investors are watching the situation in the region keenly to know whether the war can go any further or be approached on a wider diplomatic scale.