Iran's supreme leader, in first remarks, vows to avenge martyrs, keep strait closed

Iran vows to keep Strait of Hormuz closed in new leader's first statement

Escalating Tensions and Global Economic Impact

By Parisa Hafezi

New Supreme Leader's Defiant Address

DUBAI, March 12 (Reuters) - Iran will fight on and keep the Strait of Hormuz shut, new Supreme Leader Mojtaba Khamenei said on Thursday in a statement read out on state television, the first remarks attributed to him since he succeeded his slain father.

In a defiant address, Khamenei said Iran's neighbours should close all U.S. bases on their territory, which Iran would continue to attack.

"I assure everyone that we will not neglect avenging the blood of your martyrs," he told the Iranian people.

"The popular demand is to continue our effective defence and make the enemy regret! The lever of blocking the Strait of Hormuz must continue to be used," he said of the shipping route, where a fifth of global oil normally runs past Iran's coast.

Unprecedented Secrecy Surrounding New Leader

State television offered no explanation for why Khamenei's first remarks were read out by a presenter rather than delivered in a video address. No images have yet been released of him since the strike that killed his father, Supreme Leader Ayatollah Ali Khamenei.

Iranian officials have said the younger Khamenei was lightly wounded. He said in his address that his wife, sister and other family members were also killed.

Military Escalation in the Region

Tankers Ablaze in Iraqi Port

TANKERS ABLAZE IN IRAQI PORT

Shortly after his address, the Revolutionary Guards announced that, in keeping with his orders, they would keep the strait shut.

Two tankers were ablaze in an Iraqi port on Thursday after a hit by suspected Iranian explosive-laden boats, a step-up in attacks that have cut off oil from the Middle East. The attacks were a clear sign of defiance of U.S. President Donald Trump, who said on Wednesday the United States had already won the war.

Images verified by Reuters as having been filmed from the shore of the port of Basra showed ships engulfed in massive orange fireballs that lit up the night sky. At least one crew member was killed in the attacks.

Further Attacks in the Gulf

Hours earlier, three other ships had been struck in the Gulf. Iran's Revolutionary Guards claimed responsibility for at least one of those attacks, on a Thai bulk carrier that was set ablaze, which the Guards said had disobeyed their orders. Another container vessel reported being struck by an unknown projectile near the United Arab Emirates on Thursday.

Global Energy Supplies Disrupted

GLOBAL ENERGY SUPPLIES DISRUPTED

The war that began with a U.S.-Israeli bombing campaign at the end of February has so far killed around 2,000 people and caused what the International Energy Agency describes as the biggest disruption to global energy supplies in history.

Undermining U.S. and Israeli claims to have knocked out much of Iran's stock of long-range weapons, more drones were reported on Thursday flying into Kuwait, Iraq, the UAE, Bahrain and Oman.

Regional Spillover and Oil Price Surge

Lebanon's Iran-backed militia Hezbollah fired its biggest volley of rockets into Israel of the war, prompting fresh Israeli strikes on Beirut.

Oil prices soared back above $100 a barrel, having come down earlier in the week when Trump said the war would be over soon. Iran has said it will not let oil through the Strait of Hormuz, the world's most important energy trade route, until U.S. and Israeli attacks cease. [O/R]

U.S. Response and Economic Ramifications

Trump Says 'We Won'

TRUMP SAYS 'WE WON'

Trump has repeatedly tried to calm energy markets this week by saying the surge in oil prices will be short-lived.

But he has not explained how the war will end, or presented a plan to reopen the blockaded strait. U.S. and Israeli officials say the aim is to destroy Iran's missile and nuclear programmes, but Trump has also demanded Iran's "unconditional surrender" and the power to determine its leaders.

"You never like to say too ⁠early you won. We won," ​Trump told a campaign-style rally in Hebron, Kentucky, on Wednesday. "In ​the first hour it was over."

But he added: "We don't want to leave early, do we? We got to finish the job."

Economic Impact of Oil Price Surge

On Thursday, Trump said the United States profited from higher oil prices, but that his priority was stopping Iran from obtaining a nuclear weapon. The U.S. is a net oil exporter but is also the world's biggest oil consumer, burning around twice as much as its peer, the European Union. Economists say sustained high prices would cause broad inflation.

Situation Inside Iran

'Security Forces Are Everywhere'

'SECURITY FORCES ARE EVERYWHERE'

Inside Iran, residents said security forces were increasing their presence on the streets, demonstrating their continued control.

"Security forces are everywhere, more than before. People are afraid to come out, but supermarkets are open," teacher Majan, 35, said by phone from Tehran.

Three sources told Reuters that U.S. intelligence indicated that Iran's leadership was still largely intact and not at risk of collapse any time soon.

Israel and the United States have called on Iranians to rise up and topple their clerical rulers. Many Iranians want change and some openly celebrated the death on the war's first day of the elder supreme leader, whose security forces had killed thousands of anti-government protesters in January. But there has been no sign of organised anti-government activity while the country is under attack.

Iran's Economic Strategy

Tehran Seeks Prolonged Economic Shock

TEHRAN SEEKS PROLONGED ECONOMIC SHOCK

Khamenei's remarks reinforce the message from Iran that its strategy now is to impose a prolonged economic shock to force Trump to back off. A spokesperson for Iran's military command said on Wednesday that the world should prepare for oil prices of $200 a barrel.

Thursday's surge in oil prices came despite the announcement the previous day that developed countries would release 400 million barrels of oil from their strategic reserves, nearly half from the United States.

Limitations of Strategic Oil Reserves

That is by far the biggest-ever coordinated intervention into the oil markets. But releasing the reserves will take months, and account for just three weeks of supply from the blockaded strait.

"The only way to see oil p