Iran’s economic landscape, already plagued by critical water and power shortages, substantial budget deficits, and a rapidly devalued currency, is now poised for further decline.
On Saturday, the United Nations Security Council reintroduced stringent sanctions against Iran, a move prompted by the breakdown of diplomatic talks regarding its nuclear program during the General Assembly this week.
These U.N. sanctions are far more extensive than the existing American measures targeting Iran. They arise from an ongoing dispute with Europe over Tehran’s compliance with the 2015 nuclear agreement with Western powers. The situation escalated following Iran’s decision to block international inspectors from its nuclear sites after military strikes by Israel and the United States in June.
Secretary of State Marco Rubio confirmed the activation of the U.N. sanctions at 8 p.m. In a formal statement, he emphasized that this decision to reinstate restrictions serves as a clear warning: “The world will not acquiesce to threats and half measures — and Tehran will be held to account.”
The new sanctions include freezing assets and travel bans for numerous Iranian entities and individuals. They also empower countries to halt and inspect cargo traveling from Iran by air and sea on Iranian government vessels, including oil tankers.
Furthermore, the sanctions explicitly forbid Iran from enriching uranium at any level, launching ballistic missiles capable of carrying nuclear warheads, and sharing technical knowledge related to its ballistic missile program. An arms embargo has also been reinstated.
Iran’s president, Masoud Pezeshkian, condemned these sanctions as “unjust and illegal.”
“They want to topple us,” he stated during a press briefing in New York on Friday. “If you were in our place what would you do?”
Iran has not yet indicated its response to the new sanctions. President Pezeshkian confirmed that a decision would be made upon his return to Iran after consulting with other officials. On Saturday, Iran’s Foreign Ministry recalled its ambassadors from France, Britain, and Germany for urgent consultations.
Hard-line factions within Iran have advocated for withdrawing from the Nuclear Nonproliferation Treaty as a form of retaliation. Such a move would be highly alarming, as it would dismantle crucial safeguards on Iran’s commitments under the treaty. However, Mr. Pezeshkian, a more moderate figure, dismissed this idea, asserting it was not a viable option.
These sanctions arrive at a particularly vulnerable moment for Iran.
The nation is still recovering from a fierce 12-day conflict with Israel in June. This war concluded after the United States deployed bunker-buster bombs, which damaged three of Iran’s nuclear facilities. For several months, the Iranian government has also grappled with a severe energy and water crisis, necessitating mandatory cuts in supplies across many cities.
Naysan Rafati, a senior Iran analyst for the International Crisis Group, commented that while the U.N. sanctions “may not have the same financial impact as the U.S. measures currently in place, they compound the already significant strain on Iran’s economy.”
The 2015 agreement, designed to restrict Iran’s nuclear program, had lifted U.N. sanctions imposed by the Security Council between 2006 and 2010. However, a “snapback mechanism” within the 2015 deal allowed for these sanctions to be reimposed if Iran breached its terms by October 2025.
Had the deadline passed without any action, this provision would have automatically expired, and the sanctions would have lapsed. Nevertheless, in August, France, Britain, and Germany invoked the mechanism, accelerating the deadline to September 28th.
Europe has accused Tehran of violating the 2015 agreement by increasing its nuclear enrichment to 60 percent from 3.5 percent and amassing a 400-kilogram stockpile of highly enriched uranium. This quantity would enable Iran to construct several nuclear bombs should it choose to weaponize its program. They also criticized Iran for not permitting international inspectors access after the recent airstrikes.
Iranian officials maintain that their nuclear program is solely for peaceful purposes. They argue that accelerated enrichment was a direct response to the United States’ unilateral withdrawal from the nuclear accord in 2018 under President Trump, who dismissed it as “a horrible one-sided deal” despite Iran’s full compliance. To adhere to American sanctions, European nations ceased trade with Iran. Iranian officials contend that this action effectively violated Europe’s commitments under the deal.
During the briefing, Mr. Pezeshkian reiterated Iran’s commitment to not pursuing nuclear weapons, expressing surprise at the international community’s disbelief. He also asserted that Iran would not passively accept all demands from the U.S. and European powers. “We will not accept this,” he declared.
European powers have also criticized Tehran’s decision, made after the Israeli and American strikes, to suspend cooperation with the International Atomic Energy Agency by denying its inspectors access to Iran’s nuclear sites.
Europe had set three conditions for Iran to avoid these new sanctions: granting immediate access to outside inspectors; disclosing the precise location of its 400-kilogram stockpile of highly enriched uranium; and engaging in direct nuclear negotiations with the United States.
Mr. Pezeshkian confirmed that Iran was prepared to cooperate with the Europeans on all fronts, including allowing international atomic agency access, providing details on its enriched uranium stockpile, and permitting inspectors to conduct investigations.
He further elaborated during the briefing and in statements to Iranian media on Saturday that Iran had agreed to both negotiations and inspector access. However, he deemed the U.S. demand—that Iran surrender its entire 400-kilogram stockpile in exchange for a mere three-month suspension of snapback sanctions—as “unreasonable.”
On Friday, Russia and China, Iran’s two primary allies and permanent members of the Security Council, attempted to defer the sanctions for six months, proposing an April deadline. This measure, however, failed, with nine countries, including Britain, France, and the United States, voting against it.
Russia and China have already declared the snapback measure illegitimate, indicating they will likely mitigate the sanctions’ impact by maintaining trade with Iran. Both nations share strong military ties, with Iran notably supplying Russia with drones for its war efforts in Ukraine.
Economically, China and Iran are also closely linked. China remains Iran’s primary oil customer, purchasing crude oil at a substantial 20 percent discount, a critical lifeline for the Iranian government’s finances.
A senior official from Iran’s Oil Ministry, speaking in a telephone interview, suggested that while the new sanctions wouldn’t halt China’s oil purchases, they would introduce additional obstacles. He speculated that China might leverage these new restrictions to demand even larger discounts, potentially by citing concerns over Iranian oil tankers being intercepted and seized on international waters.
Some Iranian political figures have downplayed the sanctions’ immediate impact, asserting that the country has already adapted to existing measures and will find ways to navigate the new ones. They also shifted blame to Western powers, arguing that Europe and the U.S. were never genuinely committed to reaching a diplomatic resolution.
“They have made their decision, now we must make our decision, too,” Mahdi Mohammadi, a conservative senior adviser to the head of Iran’s Parliament, posted on social media. “The only way is to become strong to a level that erases the idea of Iran surrendering to the enemy.”
Despite such defiance, Iran’s economy has severely declined in recent years, suffering not only from American sanctions but also from persistent mismanagement and corruption. On Saturday, Iranian markets swiftly reacted to the news: the rial plummeted an additional 4 percent on the black market, reaching a staggering 1,126,000 to the dollar—the widely accepted rate and key indicator for inflation.
For ordinary Iranians, this news is a severe blow. They are already grappling with an annual inflation rate exceeding 40 percent, rising unemployment, and pervasive uncertainty about the country’s future. Many fear the specter of renewed conflict with Israel and the U.S. as the government’s standoff with the West intensifies.
Mehdi Bostanchi, head of Iran’s Council of Industries, stated in an interview from Tehran that businesses and industries are bracing for a sharp drop in demand. They also anticipate increased difficulties in sourcing goods internationally and tighter restrictions on insurance, banking, and shipping services.
“These restrictions create a spillover effect,” Mr. Bostanchi warned. He emphasized that small and medium-sized enterprises, which constitute over 90 percent of Iran’s industrial sector and employ roughly half of its industrial workforce, will bear the brunt of this pressure.