From Singapore: the energy shock that markets had long priced as a tail risk is now a live event. When trading opened Sunday evening, West Texas Intermediate was selling for about $72 a barrel, up around 8% from Friday, while Brent crude traded near $79 per barrel, also up approximately 8%. By Monday morning the gains had widened further. The price of a barrel of US benchmark crude jumped 9% to $73, while Brent crude leapt nearly 10% to approach $80 per barrel. The trigger was unmistakable: the killing of Iran's supreme leader.
On 28 February 2026, Ayatollah Ali Khamenei was assassinated as part of a series of Israeli missile strikes around Tehran aimed at high-ranking Iranian officials. His death was confirmed by the Iranian government on 1 March. The killing occurred as part of a wider joint operation by the United States and Israel, using strategic intelligence from the CIA to determine the whereabouts of several senior leaders. The operation, codenamed Epic Fury by the US and Roaring Lion by Israel, has been described by President Donald Trump as an ongoing campaign that will continue until its objectives are met.
A Nation Divided in Real Time
SBS News, which managed to receive messages from inside Iran despite widespread communications blackouts, captured the raw emotional complexity of the moment. While landline and internet services were down across most of Iran, one woman, identified only as Maryam, told SBS News on condition of anonymity that she had "extremely complex feelings" — deeply worried about the future but simultaneously happy about the weakening of the Islamic Republic, and hopeful for positive change.
Videos posted to social media showed streets in Tehran and other cities erupting in exuberance, with large crowds dancing, fireworks lighting up the sky, and celebratory music playing, marking the end of Khamenei's 36-year reign. The celebrations were not without context. The protests that preceded the strikes had become one of the deadliest crackdowns in Iran's history. According to the US-based Human Rights Activists News Agency, more than 7,000 protesters were killed and more than 50,000 arrested, with a further 11,700 deaths under investigation.
Pro-regime grief was equally visible. Pro-regime mourners dressed in black congregated in Enghelab (Revolution) Square, some clutching photos of Khamenei, others reportedly chanting "death to America" and "death to Israel". A man at the rally told Reuters that the news had filled him with hatred and that "we must avenge the blood of the leader".
The Hormuz Question
For Australian exporters, the signal is direct and potentially significant. Analysts expected a sharp "war premium" to be priced into crude oil, as the Strait of Hormuz, a vital chokepoint for 20 per cent of the world's oil supply, is now considered a war zone. Iran warned shipping not to traverse the strait, and tanker traffic through the waterway has effectively ceased for the time being after insurance coverage was withdrawn over the weekend.
Shares in Australian liquefied natural gas exporters surged after tankers stopped crossing the Strait of Hormuz, hampering about a fifth of global supply and threatening to raise prices of the fuel. Australia is one of the world's largest LNG exporters, competing directly with Qatar, whose terminals sit inside the danger zone. Qatar accounts for roughly 20 per cent of global LNG supply, creating structural vulnerability as Asian buyers compete for alternative sources.
The supply gap will not be easy to fill. Columbia University gas expert Anne-Sophie Corbeau notes that many countries have some extra oil in storage, but there is very little spare LNG available, with gas storage levels particularly low at the end of winter. Australian LNG producers are among the few with the capacity to benefit from a sustained price spike, though the sheer scale of global disruption carries its own inflationary risks for the Australian domestic economy, particularly through fuel prices.
The Price Ceiling and the Trump Variable
How high oil goes depends substantially on decisions made in Washington. Brent crude closed at $72.87 on Friday before the strikes; how much it gains from there depends on how long the military campaign lasts and the conflict's potential impact on the Strait of Hormuz. During Iran's 12-day conflict with Israel last year, Goldman Sachs estimated oil prices could blow past $100 a barrel if there was an "extended disruption" to the strait. Swiss bank Lombard Odier estimates that a temporary spike to $100 per barrel or beyond is plausible, and global LNG prices would also be affected if Iran moves to block the strait.
There are countervailing forces at work. OPEC and its allies said it would raise daily output by 206,000 barrels a day, above the expected 137,000 bpd increase. The production boost may somewhat blunt the expected surge, but energy analysts did not expect the increases to do much to keep prices in check. Amrita Sen, founder and director of research at Energy Aspects, told CNBC she expects oil prices to hold at around $80 for some time, and that it is unlikely the strait would be closed altogether.
Succession and Strategic Risk
Beyond the energy markets, the deeper question is whether Khamenei's death actually produces the regime change Trump has called for. Analysts are sceptical. Military analysts warn against the assumption that air strikes alone can trigger regime change. Michael Mulroy, a former US deputy assistant secretary of defence, told Al Jazeera that without "boots on the ground" or a fully armed organic uprising, the state's deep security apparatus can survive by maintaining cohesion. "You cannot facilitate regime change through air strikes alone," Mulroy said.
As the Council on Foreign Relations noted, taking out Khamenei "is not the same as regime change. The Islamic Revolutionary Guard Corps is the regime," limiting the prospects for immediate political transformation. Iran's official news agency reported that a three-person council, comprising the president, the chief of the judiciary, and one of the jurists of the Guardian Council, will temporarily assume all leadership duties until a new supreme leader is selected.
The human cost of the strikes is already severe. Saturday's strikes targeted 24 provinces, killing at least 201 people according to Iranian media citing the Red Crescent. Among the attacks, two schools were struck, killing at least 108 people at a girls' elementary school in the southern city of Minab. China condemned the killing as "a serious violation of Iran's sovereignty and security", with Foreign Minister Wang Yi stating that "the blatant killing of a sovereign leader and the incitement of regime change are unacceptable".
The moral and legal arguments over the legality of the strikes deserve serious consideration, even for those who saw Khamenei's rule as profoundly repressive. Critics of the operation called it illegal under domestic US law and a violation of Iran's sovereignty under international law, charges that US Ambassador to the United Nations Mike Waltz strongly denied at a UN Security Council emergency meeting. Those tensions will outlast this conflict regardless of its outcome.
The trade implications for Australia are direct but complicated. A short, sharp conflict followed by de-escalation would likely produce a temporary windfall for Australian LNG exporters, easing into broader market normalisation. A protracted campaign that keeps the Strait of Hormuz closed would lift export revenues further but simultaneously drive up the costs Australians pay for fuel and imported goods, eroding any macroeconomic benefit. The calculus is genuinely uncertain, and even energy-sector optimism should be tempered by the recognition that wars involving major oil chokepoints rarely unfold on anyone's preferred timeline. What is certain is that the world has entered a materially different risk environment than it occupied a week ago, and Australian policymakers, businesses, and households will need to plan for the sustained volatility that entails.