[Source: Reuters]

U.S. President Donald Trump on Monday threatened to escalate the war with Iran if it blocked oil shipments from the Middle East, even as he predicted ​a quick end to the conflict.

Trump’s warning came at the end of a day that saw global financial markets seesawing on concerns that Iran’s security establishment was rallying behind new Supreme Leader Mojtaba Khamenei and ‌was not prepared to back down any time soon.

Trump said the United States had inflicted serious damage on Iran’s air force and navy and predicted the conflict would end well before the initial four-week time frame he had laid out, though he has not defined what victory would look like.

He warned that U.S. attacks could rise sharply if Iran sought to block tanker traffic through the Strait of Hormuz, which handles one-fifth of the world’s oil supply.

“We will hit them so hard that it will not be possible for them or anybody else helping them to ever ​recover that section of the world,” Trump said at a news conference.

IRAN SAYS IT WILL DETERMINE END OF WAR

In response, Iran’s Revolutionary Guards said it would not allow “one liter of oil” to leave the region if attacks ​from the United States and Israel continue.

“We are the ones who will determine the end of the war,” a spokesperson said, according to state media.

The conflicting signals sent markets on ⁠a rollercoaster, with oil prices surging and stock markets nosediving before swinging in the other direction after Trump’s prediction of a quick end to the war and reports of a possible ease in sanctions on Russian energy.

Khamenei, 56, a Shi’ite cleric with a power ​base among the security forces and their vast business empire, has been declared unacceptable by Trump, who has demanded Iran’s unconditional surrender.

Iranian state media showed large crowds in several cities rallying behind the new leader, waving Iranian flags and holding portraits of his ​father Ali Khamenei, the supreme leader killed by an Israeli strike on the war’s first day.

In Isfahan, state TV reported the sound of nearby explosions from apparent airstrikes as loyalists gathered in the historic Imam Square, chanting “God is the Greatest” below a stage with portraits of Ali and Mojtaba Khamenei.

Iranians reached by telephone were divided, with supporters of the authorities hailing the choice and opponents fearful it would dash their hopes for change.

“It was a slap in the face to our enemies that thought the system will collapse with the killing of his father. Our late leader’s ​path will continue,” said university student Zahra Mirbagheri, 21, from Tehran.

Many Iranians had initially celebrated the elder Khamenei’s death, weeks after his security forces killed thousands of anti-government protesters in the worst domestic unrest since the era of Iran’s 1979 revolution. ​

But there has since been little sign of anti-government activity.

“The (elite Revolutionary) Guards and the system are still powerful. They have tens of thousands of forces ready to fight to keep this regime in place. We, the people, have nothing,” said Babak, 34, a businessman in ‌the central city ⁠of Arak who asked to keep his family name confidential.

Israel says its war aim is to overthrow Iran’s system of clerical rule. U.S. officials mainly say Washington’s aim is to destroy Iran’s missile capabilities and nuclear programme, but Trump has said the war can end only with a compliant Iranian government.

Israel had said it would kill whoever succeeded the elder Khamenei unless Iran ended its hostile policies.

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