Iran Supreme Leader Killed in U.S.-Israeli Strikes as Hormuz Attacks Rattle Global Markets

Missiles lit the skies over Tehran before dawn Saturday. By the time electronic trading screens flickered to life in New York on Sunday evening, Iran’s supreme leader was dead, tankers were burning near the Strait of Hormuz and investors were scrambling for safety.

The coordinated U.S. and Israeli air and missile campaign, launched around 1:15 a.m. Eastern time Saturday and code-named Operation Epic Fury by the Pentagon, killed Ayatollah Ali Khamenei in a strike on his compound in Tehran, Iranian authorities confirmed. It was the first time in the history of the Islamic Republic that a supreme leader — the country’s highest political and religious authority — had been assassinated by foreign forces.

At sea, at least three oil tankers were attacked or damaged in and around the Strait of Hormuz over the weekend, sending commercial traffic through the narrow waterway plunging. With roughly one-fifth of the world’s crude and a significant share of its liquefied natural gas normally moving through Hormuz, the threat to shipping turned a regional war into an immediate global economic shock.

As Asian markets opened Monday and futures trade deepened in the United States, oil prices jumped, stocks fell and traders rapidly marked down the odds of interest-rate cuts this spring. The moves signaled that investors were not only reacting to a new Middle East conflict, but were beginning to price in the risk of a fresh energy-driven inflation wave.

A decapitation strike at the heart of Iran’s system

The opening phase of the operation combined U.S. cruise missiles launched from ships and submarines with waves of U.S. and Israeli aircraft striking targets across Iran. Israel deployed more than 200 jets against what officials in Jerusalem described as “hundreds” of sites connected to Iran’s nuclear program, missile forces, Islamic Revolutionary Guard Corps and air defenses.

Among those targets was a secure compound in Tehran used by Khamenei. Iranian officials said the 86-year-old leader was killed at about 8:10 a.m. local time Saturday, along with several members of his immediate family. State television interrupted regular programming early Sunday to announce his death, declare 40 days of national mourning and order a seven-day public holiday.

President Donald Trump quickly claimed credit. In a televised statement and separate posts on social media, he called Khamenei “one of the most evil people in History” and said the operation was designed “to eliminate the imminent nuclear threat posed by the Iranian regime, destroy its ballistic missile arsenal, degrade its terror networks and cripple its naval forces.”

Trump also appealed directly to Iran’s security forces and population, saying they had a “single greatest chance…to take back their country” and urging soldiers to “lay down your arms or face certain death.” Those comments could not be independently verified as reflecting any organized opposition inside Iran but were widely replayed on regional media.

In Tehran, President Masoud Pezeshkian announced that a provisional leadership council had assumed Khamenei’s constitutional duties pending the selection of a new supreme leader. He said the body, which includes senior clerics and security figures, would work with the Assembly of Experts, the clerical body that formally chooses the supreme leader, to reach a decision “within one or two days.”

The Revolutionary Guard and other hard-line factions are expected to wield significant influence over the succession, though the opaque nature of Iran’s internal deliberations made it difficult to assess which candidates were emerging.

Missiles, drones and a shipping lane in the crosshairs

Iran and its regional allies responded with a barrage of missile and drone attacks on U.S. and Israeli targets. Iranian officials said they targeted Israeli cities and U.S. military installations in Bahrain, Jordan, Kuwait, Qatar and the United Arab Emirates. At least four U.S. service members had been killed in the fighting by Monday, according to U.S. Central Command, along with hundreds of people in Iran, 11 in Israel and dozens in Lebanon.

In Lebanon, the militant group Hezbollah said it launched rockets and drones at the Israeli port city of Haifa in retaliation for Khamenei’s killing. The Israeli military reported intercepting some of the incoming fire but said it had carried out extensive strikes on Hezbollah positions in southern Beirut and southern Lebanon. Lebanese health officials reported at least 31 deaths in those strikes, many believed to be civilians.

Iran’s most strategically significant moves, however, appeared aimed at the sea.

Maritime security firms and regional authorities reported that at least three oil tankers — including the Palau-flagged Skylight off Oman and the Marshall Islands-flagged MKD VYOM near the United Arab Emirates — were hit by projectiles or missiles on Sunday. Television footage aired by Iranian state media showed one tanker on fire with thick black smoke rising from its deck.

The Revolutionary Guard’s naval arm transmitted radio warnings telling commercial vessels that passage through the Strait of Hormuz was “not allowed,” according to ship operators and maritime tracking services. Iranian officials later said they had “no intention” of closing the waterway but insisted they reserved the right to do so.

Regardless of intent, traffic data showed a collapse in transits. By late Sunday, some industry trackers reported an 80% drop in overall vessel movements through Hormuz compared with the day before. No very large crude carriers were recorded passing through the strait after Saturday night. Instead, dozens of tankers and gas carriers appeared to be idling in the Persian Gulf or anchored in safer waters as shipping companies suspended sailings and governments advised vessels to avoid the area.

Oil spikes, stocks slide and bond markets buck the script

The combination of leadership decapitation in Tehran and physical attacks on shipping pushed global markets into what traders call a risk-off mode.

In oil, benchmark Brent crude, which had closed around the low $70s per barrel on Friday, leapt toward $80 in early electronic trade and briefly traded above $82 in some venues before pulling back. West Texas Intermediate, the main U.S. futures contract, jumped roughly 8% to the low $70s.

Gold, a traditional haven in periods of geopolitical stress, rose about 1% to 2%, taking spot prices near $5,300 to $5,350 an ounce, their highest in roughly a month. The U.S. dollar strengthened against most major currencies, with the dollar index climbing about 0.7% to 0.8%. The euro, British pound and Australian dollar all weakened. In Tehran, the embattled rial dropped to a record low near 1.75 million to the dollar on the unofficial market.

Equity investors turned defensive. As U.S. futures opened Sunday evening, contracts tied to the Dow Jones Industrial Average fell around 0.7%, or more than 350 points, at one stage, while S&P 500 and Nasdaq 100 futures dropped between about 0.5% and 1.5%. On Monday, the U.K.’s FTSE 100 index slid about 1.2%, its sharpest one-day decline since late 2025, led lower by airlines, travel companies and banks. Australia’s S&P/ASX 200 fell roughly 0.4%, though energy stocks jumped as much as 4% on higher oil prices.

Defense contractors benefited from expectations of sustained military demand, while carriers and tourism companies were hit by concerns about fuel costs, disrupted air routes and travel warnings for the region.

In government bonds, the reaction diverged from the typical pattern seen during major security crises. Rather than rallying, U.S. Treasurys sold off as traders focused on the inflationary impact of higher energy prices. The yield on the 10-year note rose about 0.09 percentage points to around 4.05%, its largest one-day increase in several months. Measures of expected bond volatility climbed.

Futures markets tracking Federal Reserve policy reduced the implied probability of a quarter-point interest-rate cut at the central bank’s March meeting to around 7%, down from significantly higher levels earlier this year. Pricing for cuts later in 2026 also shifted lower as investors weighed the risk that a sustained oil and gas shock could slow the Fed’s plans to ease.

A similar debate was visible in Europe. U.K. natural gas prices spiked after reports that drones had hit Qatari liquefied natural gas facilities, temporarily knocking out a chunk of global supply. Traders scaled back expectations that the Bank of England would move quickly to lower borrowing costs.

OPEC+ moves, but chokepoint risk dominates

Oil-producing nations attempted to calm markets. On Sunday, eight members of the OPEC+ alliance that had been implementing voluntary production cuts — including Saudi Arabia, Russia, Iraq, the United Arab Emirates and Kuwait — agreed to increase output by a combined 206,000 barrels a day starting in April.

In a statement, the group said the decision was taken “in view of a steady global economic outlook and current healthy market fundamentals,” and stressed that producers retained “full flexibility” to pause or reverse the increase if conditions warranted.

The additional barrels are modest relative to global consumption of about 100 million barrels a day and small compared with the potential loss if tankers continue to avoid Hormuz. Analysts said the move underscored the limits of supply management when the main risk is not a lack of reserves but the safety of the route to market.

Legal questions, public unease and an uncertain endgame

Human rights organizations and legal experts criticized the decision by the United States and Israel to target Iran’s leadership without authorization from the U.N. Security Council. They argued that the operation violated Article 2(4) of the U.N. Charter, which bars the use of force against the territorial integrity or political independence of any state except in self-defense or with Security Council approval.

Advocacy groups urged all sides to protect civilians and allow humanitarian access to affected areas in Iran, Lebanon and elsewhere. They also warned that the killing of a sitting head of state-level figure by foreign forces, even one not formally titled as such, set a precedent that could erode long-standing restraints on political assassinations.

In the United States, early public-opinion surveys suggested a divided response. One recent national poll indicated that fewer than one in three Americans supported the military operation against Iran, while more than 40% opposed it. Those numbers pointed to a potential domestic political challenge if the conflict proves more protracted than the White House has suggested. Trump has said he expects the campaign to last “four weeks or less,” though Pentagon officials have acknowledged that the duration depends on how Iran and its allies respond.

Unrest has already spread beyond the immediate battlefield. In Pakistan, Shiite demonstrators angered by Khamenei’s killing attacked the U.S. Consulate in Karachi on Sunday, prompting security forces to open fire. Authorities there reported at least 10 to 16 protesters killed in that city alone and more than 60 wounded, with additional deaths in other parts of the country.

For now, three questions loom over both capitals and trading floors: who will emerge as Iran’s next supreme leader, how long the Strait of Hormuz will remain effectively paralyzed and whether central banks can contain the economic aftershocks without tipping major economies into a downturn.

Those answers will determine whether this weekend’s shock fades into the long history of Middle East flare-ups — or marks the beginning of a conflict that reshapes the global economy for years to come.