Masoud Pezeshkian, the reformist contender, and ultraconservative Saeed Jalili led the polls held on Friday to replace the late ultraconservative president Ebrahim Raisi, who died in a helicopter crash last month.
Friday's vote, marked by a historically low turnout, "clearly shows that both reformists' and conservatives' bases have considerably shrunk," said Ali Vaez of the International Crisis Group think tank.
In the lead-up to the election, Iran's main reformist coalition supported Pezeshkian, with endorsements by former presidents Mohammad Khatami and Hassan Rouhani, a moderate.
"The reformists brought out the big guns and tried their best to mobilise their base," Vaez said on social media platform X, but "it was simply insufficient."
Likewise, the conservatives failed to garner sufficient votes "despite the tremendous resources they deployed," he added.
Vaez pointed out that the combined votes of Jalili and conservative parliamentary speaker Mohammad Bagher Ghalibaf, who came in third, totalled 12.8 million.
That figure was well below Raisi's nearly 18 million votes in the 2021 election.
Of the 61 million eligible voters, only about 40 percent cast ballots, marking a record low turnout in the Islamic Republic where some people have lost faith in the process.
More than one million ballots were spoiled.
For Vaez, the decline in turnout, from around 49 percent in 2021, was "a real embarrassment for the leadership" in Iran, where ultimate political power lies with the supreme leader, Ayatollah Ali Khamenei.
No 'miracle'
Political commentator Mohammad Reza Manafi said Pezeshkian's lead reflected a push for "fundamental changes" regarding the economy and relations with the rest of the world.
However, those favouring Pezeshkian "do not expect a miracle or a quick solution but hope he can gradually prevent conditions from worsening," Manafi added.
Iran has been reeling from the economic impact of international sanctions, which have contributed to soaring inflation, high unemployment and a record low for the Iranian rial against the US dollar.
The vote also came amid heightened regional tensions over the Gaza war between Israel and Tehran's ally Hamas, and diplomatic tensions over Iran's nuclear programme.
Pezeshkian, an outspoken heart surgeon who has represented the northwestern city of Tabriz in parliament since 2008, came out on top thanks to his "clean record without any accusations of financial corruption," said Manafi.
Official figures showed Pezeshkian with 42.4 percent of the vote, against 38.6 percent for Jalili.
The reformist has urged "constructive relations" with Washington and European capitals to "get Iran out of its isolation."
In contrast, Jalili is widely recognised for his uncompromising anti-West stance.
He is a former nuclear negotiator and currently a representative of Khamenei on the Supreme National Security Council, Iran's highest security body.
During his campaign, he rallied a substantial base of hardline supporters under the slogan "no compromise, no surrender" to the West.
He staunchly opposed the 2015 nuclear deal with the United States and other world powers which imposed curbs on Iran's nuclear activity in return for sanctions relief.
At the time, Jalili argued that the pact violated Iran's "red lines" by accepting inspections of nuclear sites.
The deal collapsed in 2018.
'Fear factor'
In a Sunday column in the ultraconservative Javan daily, political expert Ali Alavi hailed Jalili's "honesty and truthfulness, unlike the others."
The candidate also received support from Ghalibaf, who after Saturday's result urged his support base to back Jalili in next Friday's runoff.
Two ultraconservatives who dropped out a day before the election have also endorsed Jalili.
But on Sunday the reformist newspaper Etemad quoted former vice president Isa Kalantari warning against a continued conservative grip on the government.
"The country will be in peril and it will face numerous problems and challenges," he said.
Vaez said the "Jalili fear factor can't be overlooked."
"Many who didn't vote in this round might in the next one: not because they hope for better, but because they fear the worse."
Political analyst Mohammad Marandi, however, said Jalili may not be "the sort of radical that is depicted by his opponents."
Marandi believes that Iran, under either of the two candidates, will "continue to pursue strong ties with the Global South" countries.
He added that they "will still attempt to see what can be done with the nuclear deal," though Jalili "will just approach it with more scepticism."
