Iran's Assembly of Experts has named Mojtaba Khamenei to replace his father, Ayatollah Ali Khamenei, as the country's new supreme leader.
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State media reported the appointment on TV on Sunday.
Mojtaba, a mid-ranking cleric with close ties to the powerful Revolutionary Guards, had long been viewed by elements of Iran's ruling establishment as a potential successor to his father, who was killed after the US and Israel launched strikes on Iran.
Although Iran's ruling ideology frowns on the principle of hereditary succession, he has a powerful following within the Guards and his dead father's still-influential office.
Earlier on Sunday a senior Iranian cleric hinted Mojtaba Khamenei would be anointed as his father's successor.
"The name of Khamenei will continue," said Ayatollah Hosseinali Eshkevari, a member of the clerical council charged with electing a new leader, in a video published in Iranian media.
"The vote has been cast and will be announced soon," Eshkevari said.
If confirmed, the move could draw the ire of US President Donald Trump who had said he should have a role in the choice of the next leader, a demand Iran has roundly rejected.
"If he doesn't get approval from us he's not going to last long," Trump told ABC News.
The US military on Sunday reported a seventh American had died from wounds sustained during Iran's initial counter-attack a week ago, a day after Trump presided over the return of the remains of the six others who died.
As Trump pressed for an "unconditional surrender," Mohammad Bagher Qalibaf, Iran's parliament's speaker, said Tehran was not seeking a ceasefire to the war and would punish aggressors.
Israel said it continued to target senior Iranian figures, including Abolqasem Babaian, the recently appointed head of the military office of the supreme leader, killed in a Saturday strike.
As fighting escalated on day nine of the US-Israeli campaign against Iran, thick black smoke hung over Tehran on Sunday, residents said, after strikes on oil storage facilities had lit up the night sky with plumes of orange flame.
Iran's foreign ministry spokesperson Esmaeil Baghaei said the large-scale attack marked a "dangerous new phase" of the conflict and amounted to a war crime.
"By targeting fuel depots, the aggressors are releasing hazardous materials and toxic substances into the air," he wrote on X.
Israeli military spokesman Lieutenant Colonel Nadav Shoshani told reporters the depots were used to fuel Iran's war effort, including producing or storing propellant for ballistic missiles.
"They are a legal military target," he said.
Israeli Prime Minister Benjamin Netanyahu said his government would press on with the assault and strike Iran's rulers "without mercy".
"We have an organised plan with many surprises to destabilise the regime and enable change," he said in a video statement.
Trump told reporters on Air Force One that he was not seeking negotiations to end the conflict, which has driven up global energy prices, disrupted business and snarled air travel.
"At some point, I don't think there will be anybody left maybe to say, 'We surrender'," he said.
Saudi Arabia, Kuwait, the United Arab Emirates and Bahrain reported Iranian drone attacks on Saturday and early Sunday, including a huge fire that engulfed a government office block in Kuwait.
Kuwait's interior ministry said two officers were killed, while the UAE said four migrant workers had died in Iranian attacks there so far.
The UAE said air defence teams had knocked out 16 ballistic missiles and 113 drones fired towards the Gulf state on Sunday. One missile fell in the sea and four drones hit the country's territories.
Bahrain said an Iranian drone attack had caused "material damage" to a desalination plant, though water supplies were not disrupted. It was the first time an Arab country has said Iran targeted a desalination facility during the conflict.
On Saturday, Iran accused the US of striking a desalination plant on Qeshm Island, disrupting water supplies to 30 villages and calling it "a dangerous move with grave consequences".
In Saudi Arabia, two people were killed and 12 injured after a projectile hit a residential area in Al-Kharj city, the Civil Defence agency said.
Riyadh has told Tehran that continued Iranian attacks on the kingdom and its energy sector could push Riyadh to retaliate, people familiar with the matter told Reuters.
Lebanon has also been pulled into the conflict after the Iran-backed militant group Hezbollah launched rockets and drones into Israel last week, with nearly 400 people killed by Israel over the past week, the health ministry said.
The US and Israel have discussed sending special forces into Iran to secure its stockpile of highly enriched uranium at a later stage of the war, Axios reported.
Asked on Saturday about sending ground troops to secure nuclear sites, Trump said it was something they would only do if the Iranians were "so decimated that they wouldn't be able to fight at the ground level".
The US-Israeli attacks have killed at least 1332 Iranian civilians and wounded thousands, according to Iran's UN ambassador.
Iranian attacks have killed 10 people in Israel.