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 into a nosedive.
Khamenei, 56, a Shi'ite cleric with a power base among the security forces and their vast business empire, has 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 rallied around the new supreme leader, who replaces Ali Khamenei, killed by strikes on the war's first day. Politicians and institutions issued pledges of loyalty and 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 defence council statement said.
Iranians reached by telephone were divided, with supporters of the authorities elated at the choice as a wartime declaration of defiance and opponents fearful it would dash their hopes for change.
"I am so happy that he is our new leader. It was a slap in the face to our enemies that thought the system will collapse with the killing of his father. Our late leader's path will continue," said university student Zahra Mirbagheri, 21, from Tehran.
Many Iranians had 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. There has since been little sign of anti-government activity, with activists fearful of taking to the streets while Iran is under attack.
"The Guards and the system are still powerful. They have tens of thousands of forces ready to fight to keep this regime in place. We, the people, have nothing," said Babak, 34, a businessman in the central city of Arak who asked to keep his family name confidential.
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 on Sunday again demanded Washington have a say in the selection of the 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".
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 Iran's 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 more than 14% at $105.80 per barrel at 1107 GMT, having earlier shot as high as $119.50, on track at one point for the biggest jump in a 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 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 pledges 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 U.S.A., and World, Safety and Peace," Trump posted on Truth Social on Sunday night. "ONLY FOOLS WOULD THINK DIFFERENTLY!"
Tehran was choked in black smoke after an oil refinery was hit, an escalation in strikes on Iran's domestic energy supplies which appeared to trigger attacks on Washington's Gulf Arab allies.
Thick smoke rose from a refinery in Bahrain, where state oil company Bapco declared force majeure.
Israel's 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 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. 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 in Beirut on Sunday.
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.
In Israel, ambulance workers said one man died from shrapnel wounds at a construction site on Monday, raising to 11 the death toll in Iranian strikes.
(Reporting by Reuters bureaux, Writing by Michael Perry and Peter Graff, Editing by Lincoln Feast and Timothy Heritage)
