Iran Names New Leader as Oil Surges, Crypto Reacts

• Iran appoints Mojtaba Khamenei as the supreme leader amid the expanding U.S.–Israel war with Iran.
• Oil surged as Brent hit $118.73 and WTI $111, while Asian equities sold off amid rising tensions.
• The Crypto Fear and Greed Index is at 19, indicating extreme fear among investors.

Iran has appointed Mojtaba Khamenei as the country’s new supreme leader after the death of his father, Ayatollah Ali Khamenei, in an airstrike during the opening stage of the US-Israeli war on Iran.

The decision was announced early Monday by the Assembly of Experts, a council of 88 senior clerics responsible for selecting Iran’s highest authority.

Mojtaba Khamenei, 56, now becomes the third supreme leader in Iran’s modern history after the position was created following the 1979 Iranian Revolution.

Mojtaba Khamenei has long been viewed as closely connected to Iran’s Islamic Revolutionary Guards Corps and now takes control not only as the country’s political and religious authority but also as commander in chief of its armed forces.

The leadership change comes nine days into the ongoing war between Iran, the United States, and Israel, with attacks spreading across the Gulf region.

Markets Reaction

Oil prices surged as traders priced in the risk of supply disruptions around the Strait of Hormuz, a narrow waterway that carries roughly one-fifth of the world’s oil supply.

Brent crude jumped to $118.73 per barrel during Asian trading, the highest level since June 2022. WTI crude also moved sharply higher, briefly trading near $111 per barrel.

Equity markets across Asia sold off as investors moved away from risk assets. Japan’s Nikkei 225 dropped 6.2% shortly after the open, while South Korea’s Kospi fell as much as 8.1%. Australia’s S&P/ASX 200 declined 3.3%.

At the same time, capital flowed into defensive assets. The US Dollar Index rose 0.69% to 99.67, while the US 10-year Treasury yield climbed to 4.19%.

The cryptocurrency Fear and Greed Index has fallen to 19, signaling extreme fear in the market. Bitcoin dropped as much as 2.36% in early Asian trading, falling to $65,633 before recovering slightly. At press time, BTC trades around $67,000. 

This comes as US Spot Bitcoin exchange-traded funds recorded nearly $6 billion in net outflows since November.

Analytics firm Bitcoin Vector noted that Bitcoin’s Risk Index has historically moved closely with spot Bitcoin ETF flows. After several months of ETF outflows, last week saw the first signs of renewed accumulation.

If those inflows continue, the Risk Index could move toward lower risk levels near 25, a range where buyers historically regain control of the market.

When oil prices rise sharply, energy costs increase across the global economy. Higher fuel prices feed into transportation, manufacturing, and consumer prices.

If inflation rises, central banks such as the US Federal Reserve have fewer reasons to cut interest rates. Higher interest rates tend to strengthen the US dollar and reduce demand for risk assets like BTC.

Related: How Crypto Is Helping Iran Bypass Sanctions and Move Funds