By Parisa Hafezi and Maayan Lubell
DUBAI/JERUSALEM, March 9 (Reuters) - Iran named Mojtaba Khamenei to succeed his slain father as supreme leader on Monday, signalling 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 plunging into a nosedive.
The younger Khamenei, 56, a Shi'ite cleric with a power base among the security forces and their vast business empire, has already been declared unacceptable by U.S. President Donald Trump, who has demanded Iran's unconditional surrender.
IRAN'S POLITICAL SYSTEM RALLIES BEHIND MOJTABA
Iran's political system swiftly 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 in the day.
"We will obey the commander-in-chief until the last drop of our blood," a statement from the defence council said.
Mojtaba's father, Supreme Leader Ali Khamenei, was killed in one of the first strikes launched against Iran more than a week ago.
Mojtaba 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, 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 programme, 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 more than a week, producers have run out of storage and are being forced to halt pumping.
Brent crude futures were up 15.5% at $107.06 per barrel at 0831 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 and higher inflation sent share markets in Asia and Europe into a tailspin, with futures showing the fall was likely to carry over to Wall Street when it opens later on Monday.
Tehran was choked in heavy black smoke from strikes that hit an oil refinery, an escalation in attacks to target Iran's own domestic energy supplies which appeared to trigger retaliatory 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 begun a wave of attacks in central Iran and had struck the Lebanese capital Beirut, where Israel has extended its campaign after the Iran-backed militia Hezbollah fired across the border.
The U.S. military reported a seventh American had 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, the first fatalities among its troops since Israel-Hezbollah hostilities resumed last week.
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 U.S.-Israeli attacks have killed at least 1,332 Iranian civilians and wounded thousands, according to Iran's U.N. ambassador. Lebanon has reported scores of people killed there.
(Reporting by Reuters bureaux, Writing by Michael Perry and Peter Graff, Editing by Lincoln Feast and Timothy Heritage)
