Iran chose Mojtaba Khamenei, the hardline son of the assassinated Ayatollah Ali Khamenei, as its new supreme leader, signaling Tehran won’t back down in a war now raging across the Middle East and causing a surge in energy prices.

The choice was quickly criticized by U.S. President Donald Trump, who is under mounting pressure as oil prices rise to near four-year highs and fears grow of a new inflation crisis.

The effective closure of the Strait of Hormuz has forced Saudi Arabia, the world’s biggest oil exporter, to reduce production, according to a person familiar with the matter. That follows similar moves by the United Arab Emirates, Kuwait and Iraq.

Brent crude climbed about 11% to $103 as of 12:20 a.m. in London on Monday. It rose to almost $120 earlier in the day, but pared gains after people familiar with the matter said Group of Seven finance ministers are preparing to discuss a possible joint release of emergency fuel reserves.

Stocks tumbled and a global bond rout accelerated, while the dollar hit its highest level in seven weeks.

Trump, whose administration is already facing criticism after U.S. gasoline pump prices jumped last week, called $100 oil a “small price to pay” and said the cost “will drop rapidly when the destruction of the Iran nuclear threat is over.”

The war — now in its second week — shows no sign of easing off. The U.S. and Israel continued to strike Iran, which is still attacking Israel and Arab Gulf states regularly with drones and missiles.

The North Atlantic Treaty Organization intercepted a ballistic missile fired from Iran toward Turkey on Monday, the second such incident, raising the risk the military alliance could be drawn more directly into the conflict.

Khamenei — whose father ruled Iran for almost 37 years and was killed when U.S.-Israeli strikes began on Feb. 28 — won a “decisive vote” in Iran’s Assembly of Experts to become supreme leader, Iranian media reported late Sunday. The 56-year-old has deep ties to the Islamic Revolutionary Guard Corps, about the most powerful military and economic organization in Iran and which pledged full obedience to the new leader.

Trump told Fox News he is “not happy” with Iran’s pick. Khamenei was a favorite to be selected, though there were several other candidates in the running, some of who might have been more amenable to the U.S.

Mojtaba “shares many of the same ideological leanings as his father and will aim to maintain continuity — including in the war,” said Dina Esfandiary, a Bloomberg Geoeconomics analyst. His election “suggests Iran won’t be shifting tack in the Middle East war,” she said.

On Saturday, Iran President Masoud Pezeshkian vowed not to back down, saying “the idea that we would surrender unconditionally — they must take such a dream to the grave.”

Saudi Arabia hardened its tone against Iran as it dealt with incoming projectiles again on Monday, including ones heading toward oil giant Aramco’s Shaybah field and areas in and around Riyadh.

The Saudi foreign ministry warned that Tehran’s actions risk further escalation, in which Iran “will be its biggest loser.” The kingdom also said the Iranian attacks will have a “profound” impact on future relations.

The strikes and the comments suggest the kingdom’s efforts last week to intensify its diplomatic outreach to Iran — a bid to contain the war — aren’t working.

On Monday, the U.S. ordered American non-essential diplomats in Saudi Arabia to leave the country, citing safety risks. The move marks Washington’s first “ordered departure” since the war began. It follows a U.S. service member dying overnight after being wounded in an attack on U.S. troops in Saudi Arabia on March 1. That brought the U.S. death toll in the war to seven.

Riyadh reported its first fatalities since the start of the war, with two deaths occurring when a projectile fell in a residential area near the Prince Sultan air base outside of Riyadh, which houses U.S. troops.

Iranian officials say more than 1,300 people have died due to the U.S. and Israel’s attacks so far.

Israel struck many fuel depots in Tehran on Saturday, sparking a warning from the Red Crescent about toxic acid rain in the city of 9.5 million people.

Axios reported that U.S. officials were unhappy with the strikes, thinking they could backfire strategically by angering Iranian civilians. U.S. Senator Lindsey Graham, a firm supporter of the war, asked Israel to “please be cautious about what targets you select.” Oil infrastructure, he said, will be essential to Iran’s recovery “when this regime collapses.”

Israel said the fuel storage sites were legitimate military targets because they help Iran’s war effort, and added it might target power stations next. Israeli forces continued to attack southern Lebanon, aiming to degrade Iran-aligned Hezbollah.

Trump is weighing the option of deploying special forces on the ground to seize Iran’s near-bomb-grade uranium, as officials grow increasingly concerned the stockpile may have been moved, according to three diplomatic officials briefed on the matter.

“They haven’t been able to get to it and at some point, maybe we will,” Trump said late Saturday during a briefing aboard Air Force One. “We haven’t gone after it, but it’s something we can do later on. We wouldn’t do it now.”

A desalination plant in Bahrain was damaged following an Iranian drone attack, the Arab country’s government said, adding that there was no impact on water supplies.

The Iranian strike on Bahrain came after Tehran accused the U.S. of hitting one of its desalination plants. Persian Gulf countries rely on the facilities for most of their fresh drinking water and sustained attacks could compound the impact of a war.

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—With assistance from Patrick Sykes, Dana Khraiche and Alisa Odenheimer.

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