OPINION: Iran's Supreme Leader Ayatollah Ali Khamenei has pledged "severe punishment" after the US eliminated Iran’s feared clandestine and military supremo, Qasem Soleimani.

The killing late last week sparked fears of a full-blown war in the already explosive Persian Gulf region, which serves as the lifeblood of the global economy.

"With him gone, severe revenge awaits the criminals who bloodied their foul hands with his blood," Khamenei warned.

One should not, however, expect any suicidal acts against the US from Iran. Despite its image as a rogue state, the regime in Tehran has cool heads that always prevail when its clerical regime is faced with existential threats.

Iran’s legendary revolutionary leader Ayatollah Ruhollah Khomeini took "the position chalice" and decided to end a ruinous war with Iraq in 1988 when forces of then Iraqi leader Saddam Hussein, whom Khomeini had vowed to topple at any cost, turned the tables on Iran. Tehran caved in and embraced a long-standing United Nations ceasefire that ended the war.

There may, therefore, be a silver lining for relations between opposing parties in Soleimani’s assassination. Tehran is now likely to step up diplomacy in a bid to end US sanctions, which have choked off its oil exports, triggering a financial crisis that threatens the ruling religious elite.

It could also give Khamenei breathing space — thanks to the outpouring of national sympathy for Soleimani — to help ease widespread domestic resentment.

Khamenei is credited with ordering the mass killings of protesters in October as pent-up anger over economic mismanagement erupted in unprecedented nationwide riots over a hike in fuel prices.

Massively outgunned and suffocating under some of the most biting sanctions ever imposed on any country, Iran cannot afford a direct confrontation with the US.

It may instead engage in low-profile retaliatory measures against the US and its conservative regional Arab allies through a vast network of proxy militias that Soleimani helped to create.

But with US President Donald Trump resorting to a more aggressive posture towards Iran after a long period of dithering, Khamenei is well aware of the limits of his military powers.

Iran is now relying on Iraq to help undermine the US military at a time when Trump is putting more boots on the ground in the Persian Gulf. At the same time, a rapprochement is under way with the Arab Gulf states that are urging restraint.

The Iraqi parliament passed a resolution following Soleimani’s killing, ordering the removal of US military forces.

Tensions between the US and Iran have been on the boil since 2018, when Trump withdrew from the landmark 2015 Iran nuclear deal and moved to impose stifling sanctions on Tehran.

In response, Iran and its proxies staged attacks on oil tankers in the Persian Gulf before pulling off a spectacular missile and drone assault on Saudi oil installations in September. Trump did nothing, which only served to encourage Tehran to target US interests through proxies.

The killing of a US contractor at a base in northern Iraq last month prompted US air strikes that killed 25 pro-Iranian fighters.

Iraqi militias retaliated by storming the US Embassy in Baghdad, which revived painful memories of the humiliating occupation of the US Embassy in Tehran in 1979.

Trump’s patience finally ran out, ordering Soleimani’s elimination. And with the US president now threatening severe retaliation against any hostile move by Tehran, Khamenei’s embattled government’s best hope for an end to four decades of hostility with the US lies through diplomacy.

(This is an Upstream opinion article.)