Global stock markets tumbled and energy prices surged yesterday as supply disruptions caused by the US-Israel war on Iran rattled investors, fuelling volatility and inflation fears.
US President Donald Trump said over the weekend that the price spike was a “small price to pay” to eliminate Iran’s nuclear threat, as the war showed no signs of easing.
Oil prices rocketed above $100 a barrel, as Iran marked the appointment of Mojtaba Khamenei to succeed his slain father Ali Khamenei with a new barrage of missiles targeting Israel and the Gulf energy infrastructure.
Saudi Arabia battled drones targeting oil fields, and Bahrain’s energy company warned that it may be unable to fulfil export contracts after strikes on its oil facility.
With the key shipping route through the Strait of Hormuz off Iran remaining closed to almost all oil tankers, the price of benchmark crude oil contracts spiralled 10 percent to their highest levels since Russia’s invasion of Ukraine in 2022.
Finance ministers from the G7 group were due to meet later in the day to discuss releasing strategic oil reserves to try to dampen prices, which are up around 40-50 percent since the US and Israel launched their first attacks.
US stocks followed European and Asian markets lower. All three major US indices were down at least one percent in opening trade. European stocks also slid. Japan’s Nikkei index closed down more than five percent and South Korea’s Kospi by nearly six percent.
Iranian state media said the Assembly of Experts, Tehran’s top clerical body, had named the leader despite “the brutal aggression of the criminal America and the evil Zionist regime”, then showed a missile ready for launch bearing the slogan “At your command, Sayyid Mojtaba”.
Iran’s security chief Ali Larijani told Khamenei that his appointment had “caused the hostile and warmongering enemies to despair.”
Trump told the New York Post he was “not happy” about the appointment yesterday after telling ABC News a day before that “if he doesn’t get approval from us, he’s not going to last long.”
After similar threats from Israel, a Chinese foreign ministry spokesman warned that Beijing opposes targeting leaders and insists “Iran’s sovereignty, security, and territorial integrity should be respected”.
Russia’s President Vladimir Putin went further, sending the new supreme leader a direct message of support. “At a time when Iran is confronting armed aggression, your tenure in this high position will undoubtedly require great courage and dedication,” Putin said. “Russia has been and will remain a reliable partner.”
Following strikes on Bahrain’s Al Ma’ameer oil facility that ignited a fire, the country’s state-owned energy company Bapco joined its counterparts in Qatar and Kuwait in declaring “force majeure” -- a warning that events beyond its control may lead it to miss export targets.
The war has triggered concerns about the economies of the Gulf states, hitting their oil and gas sectors but also aviation and tourism.
Iran said that security within the strategic Strait of Hormuz could not be guaranteed for as long as the war continues.
French President Emmanuel Macron said that his country and allies were working to put together a “purely defensive” mission to reopen the strait through which nearly 20 percent of the world’s crude oil usually transits.
The Saudi defence ministry said yesterday it had thwarted a drone attack targeting an oil field in the kingdom’s east, near the Emirati border.
As governments around the region seek to protect their image as safe havens, Qatari authorities said they have arrested more than 300 people for sharing images online and what they described as “misleading information”.
The announcement followed similar but smaller-scale arrests and warnings issued in Bahrain, Kuwait, Saudi Arabia and the UAE.
The war came just weeks after Iranian authorities under Ali Khamenei crushed nationwide protests against the government.
Few expect major changes in Iran’s stance under the younger Khamenei, appointed to replace the cleric who led Iran for nearly four decades and who was killed in the first wave of US-Israeli strikes and who is considered close to Iran’s ideological armed force -- the Islamic Revolutionary Guard Corps (IRGC).
The IRGC quickly pledged support for the new leader, saying they were “ready for complete obedience and self-sacrifice in carrying out the divine commands”.
Iran’s allies and proxies also rushed to express support, with the powerful Badr organisation in Iraq saying the new leadership represents “blessed continuity of the path of the Islamic revolution”.
Hezbollah pledged allegiance to Iran’s new supreme leader, saying, “We extend our warmest congratulations and blessings on this occasion. We renew our pledge of loyalty to this blessed approach and our steadfastness on the path of allegiance.”
Another missile was fired at NATO member Turkey, the second such incident in five days, with the alliance’s air defences intercepting it before it could hit its target. Washington has advised non-essential staff to leave its consulate near the southern Turkish city of Adana and ordered US citizens to leave southeast Turkey.
More explosions were heard in Tehran and central Israel as the foes exchanged strikes. At least one Israeli was killed, a man said to be approximately 40, when shrapnel showered a building site, the Magen David Adom emergency service said. At least 10 explosions were audible in Tel Aviv, Israel’s commercial hub, after the military announced it had detected missiles inbound from Iran.
The multi-front war also intensified in Lebanon. Iran-backed Hezbollah said they were engaging Israeli forces who landed in eastern Lebanon on 15 helicopters across the Syrian border and a new powerful strike hit the southern districts of Beirut.
Large plumes of smoke rose from the area after the strike, which came after the Israeli military warned it would destroy branches of Al-Qard al-Hassan, a Hezbollah-linked financial firm.
Hezbollah said combat was ongoing in eastern Lebanon after its fighters “engaged the helicopters and the infiltrating force with appropriate weapons”.
Lebanon’s health minister said Israeli strikes have killed at least 394 people since the start of the war, including 83 children and 42 women.
In Bahrain, the health ministry reported 32 people wounded overnight by an Iranian drone attack on the island of Sitra.
The wounded include a 17-year-old girl who suffered severe head and eye injuries and a two-month-old baby, according to the ministry.
Saudi Arabia said Sunday that two people were killed and 12 wounded as a projectile landed in Al-Kharj province.
Iran’s health ministry said Sunday that at least 1,200 civilians had been killed and around 10,000 wounded -- figures AFP could not independently verify.
In Israel, Iranian missile attacks have killed 10 people, according to authorities. Two soldiers were killed in Lebanon, the military said.
