From Dubai: The regional dynamics at play are more complex than the headlines suggest. When joint US-Israeli strikes killed Ayatollah Ali Khamenei at his Tehran compound on Saturday, they did not merely remove a single leader. The death of a man who held ultimate authority over Iran's armed forces, judiciary, intelligence services, and state broadcasting for more than three decades has plunged the Islamic Republic into its most critical leadership transition since the 1979 revolution. The question now is not simply who comes next, but whether the system Khamenei spent decades consolidating can hold itself together under fire.
Khamenei, who had ruled the Islamic Republic for more than three decades as it faced off with the West, was 86 at the time of his death. Iran's Nour News, affiliated with the Supreme National Security Council, confirmed his death on Sunday morning, reporting that he was killed at his office and that the attack also claimed the lives of his daughter, son-in-law, grandchild, and a daughter-in-law. Iranian state media announced 40 days of national mourning.
US President Donald Trump said the objective was "to defend the American people by eliminating imminent threats" from Iran, while the Israeli Defence Ministry described the operation as a "preemptive" strike. The Israeli military said some 200 fighter jets carried out an extensive attack in western and central Iran, marking the largest military flyover in the history of the Israeli Air Force. Israel claimed that Ali Shamkhani, a top adviser to Khamenei, and the head of Iran's powerful Revolutionary Guards, General Mohammad Pakpour, were also killed in the strikes. Trump later told reporters there were 48 Iranian leaders dead in total, according to reporting by the Sydney Morning Herald.
A Constitution Tested by War
A three-person council was formed on Sunday to hold power until Khamenei's successor is chosen, but with US-Israeli strikes ongoing, there is no indication of how long that process might take. Under Iran's constitution, the council includes the moderate president, Masoud Pezeshkian, the hard-line head of the judiciary, Gholamhossein Mohseni Ejei, and a senior cleric, Alireza Arafi. The arrangement reflects the deep ideological fault lines inside the Iranian system: a reformist president sitting alongside a hard-line jurist, with a cleric bridging the gap.
Constitutionally, the Assembly of Experts is tasked with selecting the next leader, a council that examines possible candidates in secrecy. The panel consists entirely of Shiite clerics who are popularly elected every eight years and whose candidacies are approved by the Guardian Council, Iran's constitutional watchdog. But the circumstances make a timely convening deeply uncertain. Sanam Vakil, director of the Middle East and North Africa programme at the Chatham House think tank, said the Assembly of Experts may not convene until the US and Israel wind down their operation. "They cannot risk further death and damage to the institution," she told CNN.
The succession problem is made worse by the sheer breadth of the losses. What the regime may not have planned for is having lost several of its most senior officials at once. Israel had already hobbled two key proxies, Hamas and Hezbollah, and wiped out Iran's air defences. With US help, it left Iran's nuclear programme in shambles. The strikes of this weekend compounded all of that.
Who Might Lead Iran Next?
The veteran leader did not have an officially declared heir. Instead, an elected body of 88 senior clerics, known as the Assembly of Experts, will select the next leader. The field of potential successors is wide, and none commands an obvious consensus.
Khamenei's second son, Mojtaba, is a significant figure with strong links to the Islamic Revolutionary Guard Corps (IRGC), as well as the Basij paramilitary force. But given that the regime swept to power to replace the Iranian monarchy, the Shiite clerical establishment may want to avoid father-to-son succession. An additional hurdle is that Mojtaba is not a high-ranking cleric and has no official role in the regime. He was sanctioned by the US in 2019.
A lesser-known figure, Alireza Arafi, is an established cleric with a track record in government institutions who was also a confidant of Khamenei. He currently serves as deputy chairman of the Assembly of Experts and has been a member of the powerful Guardian Council, which vets election candidates and laws passed by parliament. He is also head of Iran's seminary system. His position on the transitional council itself adds to his visibility at a critical moment. Mohammad Mehdi Mirbagheri, representing the most conservative wing of the clerical establishment, is another contender, as is Hassan Khomeini, a grandson of the Islamic Republic's founder who is known to be less hard-line than his peers.
Vakil of Chatham House has noted that the tension between hard-liners and reformists will not disappear with Khamenei's death. "Moments of succession tend to strengthen conservative and security-driven factions, at least initially," she said. "Any internal debate about the country's direction is likely happening quietly and within narrow elite circles rather than in public view. If reform politicians have ambitions, this is their now-or-never moment."
The IRGC's Shadow
What Western coverage frequently misses is the degree to which formal constitutional processes in Iran have always operated in the shadow of the Islamic Revolutionary Guard Corps. In a moment of uncertainty, the IRGC's stance could prove decisive in shaping consensus around a candidate, or in ensuring continuity through a transitional council. The commander-in-chief of the IRGC was also killed in the US-Israeli attack on Saturday, the second such killing in less than a year, and the next leader of the elite military and economic force is yet to be announced. Yet the organisation itself remains intact, with an estimated 150,000 to 190,000 troops, as well as deep roots in Iran's civilian economy.
President Trump has urged ordinary Iranians to seize the moment and topple what remains of the regime, but analysts are sceptical. Former CIA Director David Petraeus told CNN there is no organised alternative force waiting to take power in Iran, drawing a pointed contrast with the Syrian opposition that toppled Bashar al-Assad in 2024. The comparison is instructive: regime change from the outside, without a credible internal successor movement, rarely produces the orderly democratic transition that Washington envisions.
Hormuz, Oil, and the Australian Dollar
For Australia's energy sector, this signals serious near-term uncertainty. Attention has shifted to the Strait of Hormuz, where any disruption would have immediate and outsized consequences for global oil and LNG flows. The strait serves as a critical transit route for global crude, with about 13 million barrels per day moving through it in 2025, equal to approximately 31% of all seaborne oil flows. Iran has hit back, with the Iranian Revolutionary Guard claiming it struck three US and British oil tankers, while blasts were reported over Dubai and Doha.
The risk-sensitive Australian dollar fell 0.7% to $0.7065, though traders believed the more durable pressure would fall on energy importers. How the oil market ultimately reacts will depend on whether the war leads to a prolonged disruption to traffic through the Strait of Hormuz. UBS analysts told clients in a Sunday note that they viewed "the pace of the rebound in traffic through Hormuz and the extent of Iranian retaliation as key for the oil price in the next few days." Australia imports refined petroleum products and remains exposed to any sustained spike in global crude prices, which flows directly into fuel costs and, by extension, into inflation.
Eight countries that are part of the OPEC+ oil cartel announced they would boost production on Sunday, a move designed to prevent runaway price rises. Whether that is enough depends entirely on what happens next in Tehran and at sea.
The Harder Questions
The instinct in some Western quarters to frame Khamenei's killing as an uncomplicated strategic win deserves scrutiny. Khamenei's death does not automatically signal systemic collapse. The Islamic Republic was designed with layers of institutional redundancy. Yet without a unifying figure at its summit, the balance between ideological authority and military power may face its most serious test since 1989. History offers no clean playbook: the 1979 revolution itself was built on the rubble of a state that many assumed was too entrenched to fall.
The democratic legitimacy questions surrounding Washington's approach are also real and cannot be easily dismissed. The decision to strike Iran has prompted accusations of a constitutional breach for launching a war without congressional authorisation, with many Democrats and at least two Republicans on Capitol Hill reacting to what Trump himself described as "major combat operations." These are not trivial objections from a rule-of-law perspective, whatever one thinks of Khamenei's record or the Iranian regime's conduct over 37 years.
The path from here is genuinely uncertain. Whether Iran experiences continuity, recalibration, or internal rupture will depend on how swiftly and cohesively its ruling establishment moves to fill the void. The Australian government, like all US allies, will be watching the succession process in Tehran and the state of the Iran sanctions regime with close attention. Canberra has an interest both in regional stability and in the energy price signals that flow from whatever emerges. For now, those signals are pointing in an uncomfortable direction. The prudent response is to resist the pull of easy narratives and watch how the institutions inside Iran, fractured and battered as they are, actually behave in the days ahead.