Iran’s economic situation, already dire with critical water and power shortages, significant budget deficits, and a rapidly devalued currency, is now poised to worsen considerably.
On Saturday at 8 p.m., the United Nations Security Council is scheduled to reimpose stringent sanctions on Iran due to its nuclear program. This follows the collapse of a last-ditch diplomatic effort conducted on the sidelines of the General Assembly earlier this week.
These new U.N. sanctions are far more extensive than the existing American sanctions against Iran. They originate from an ongoing dispute with European powers regarding Tehran’s compliance with the 2015 nuclear agreement and Iran’s recent decision to deny international inspectors access to its nuclear sites after attacks by Israel and the United States in June.
The impending sanctions would freeze assets and prohibit travel for numerous Iranian entities and individuals. They also empower countries to halt and inspect cargo, including oil tankers, traveling from Iran by air and sea on Iranian government vessels.
Furthermore, the sanctions would forbid Iran from enriching uranium at any level, developing ballistic missiles capable of carrying nuclear warheads, and sharing technical expertise related to its ballistic missile program. An arms embargo would also be reinstated.
Iran’s President, Masoud Pezeshkian, publicly condemned the proposed sanctions as “unjust and illegal.”
Speaking to reporters in New York on Friday, he challenged, “They want to topple us. If you were in our place what would you do?”
Iran has not yet announced how it intends to respond to these new measures. President Pezeshkian stated 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 discussions.
Hard-line factions within Iran have advocated for the country to withdraw from the Nuclear Nonproliferation Treaty as a form of retaliation. Such a move would spark significant international alarm by removing crucial safeguards on Iran’s treaty commitments. However, Mr. Pezeshkian, a more moderate figure, dismissed this idea, asserting it was not a viable option.
If implemented as planned, these sanctions will strike Iran during an exceptionally vulnerable period.
The nation is still recovering from a fierce 12-day conflict with Israel in June, which concluded after the United States deployed bunker-buster bombs that damaged three of Iran’s nuclear facilities. For months, the Iranian government has also been struggling with an acute energy and water crisis, leading to mandated cuts in essential 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 curtail Iran’s nuclear ambitions had previously lifted U.N. sanctions imposed by the Security Council between 2006 and 2010. Crucially, the 2015 accord included a “snapback mechanism,” allowing these sanctions to be reimposed if Iran violated its terms before October 2025.
Had the deadline passed without action, this provision would have automatically expired, and the sanctions would have lapsed permanently. However, in August, France, Britain, and Germany triggered the mechanism, accelerating the deadline to September 28.
Europe has accused Tehran of breaching 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 theoretically enable Iran to develop several nuclear bombs if it chose to weaponize its program. Furthermore, European nations cite Iran’s refusal to allow international inspectors following the recent airstrikes as a violation.
Iranian officials continue to assert that their nuclear program is exclusively for peaceful purposes. They argue that accelerated enrichment was a direct response to the United States unilaterally withdrawing from the nuclear accord in 2018 under President Trump, who famously denounced it as “a horrible one-sided deal,” despite Iran’s full compliance at the time. To adhere to American sanctions, European countries ceased trade with Iran, a move Iranian officials claim constituted a violation of Europe’s commitments under the deal.
During the briefing, Mr. Pezeshkian reiterated that Iran has no intention of pursuing nuclear weapons and expressed bewilderment that the international community doubted this claim. He also firmly stated that Iran would not passively accept the demands of the U.S. and European powers without protest. “We will not accept this,” he declared.
European nations have also condemned Tehran’s decision, made after the Israeli and American strikes, to suspend cooperation with the International Atomic Energy Agency by blocking its inspectors from accessing Iranian nuclear sites.
Europe had outlined three prerequisites for Iran to avert the new sanctions: granting immediate access to external inspectors, disclosing the location of the 400-kilogram stockpile of highly enriched uranium, and engaging in direct nuclear negotiations with the United States.
Mr. Pezeshkian affirmed Iran’s readiness to collaborate with European nations, stating, “whether it’s with the international atomic agency, or about the stockpile of enriched uranium and the inspectors to come and investigate.”
He explained in the briefing and in remarks to Iranian media on Saturday that while Iran had agreed to negotiations and inspector access, the United States insisted that Iran surrender its entire 400 kg stockpile in exchange for a mere three-month suspension of snapback sanctions. Mr. Pezeshkian deemed this condition “unreasonable.”
On Friday, Russia and China, Iran’s key allies and permanent members of the U.N. Security Council, attempted to postpone the sanctions by six months, pushing the deadline to April. However, this measure was defeated, with nine countries, including Britain, France, and the United States, voting against it.
Both Russia and China have already declared the snapback measure illegitimate and are likely to mitigate the sanctions’ effects by maintaining their trade relations with Iran. Russia and Iran share strong military ties, with Iran supplying drones to Russia for its conflict in Ukraine.
China also boasts robust economic connections with Iran. As the primary buyer of Iranian oil, China procures crude at a substantial discount of approximately 20 percent, a crucial lifeline for the Iranian government’s economic stability.
A senior official in Iran’s Oil Ministry stated in a telephone interview that while the new sanctions wouldn’t halt China’s oil purchases, they would introduce additional obstacles. He suggested that China might leverage these sanctions to demand even deeper discounts, possibly by raising concerns about Iranian oil tankers being intercepted and seized in international waters.
Some Iranian political figures have downplayed the sanctions’ impact, asserting that the country has successfully navigated existing sanctions and will find new strategies to manage the latest ones. They also shifted blame to Western powers, claiming that Europe and the U.S. were never genuinely committed to 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 these claims, Iran’s economy has severely deteriorated in recent years, plagued not only by American sanctions but also by chronic mismanagement and corruption. On Saturday, Iranian markets swiftly reacted to the news of the new sanctions, with the rial plummeting 4 percent to an alarming 1,126,000 to the dollar in the black market – the widely accepted exchange rate and a key indicator of inflation.
For ordinary Iranians, the news delivered a harsh blow. They are already contending with over 40 percent inflation, rising unemployment, and pervasive uncertainty about the country’s future. Many citizens also harbor deep fears of renewed conflict with Israel and the U.S. as the government’s standoff with the West persists.
Mehdi Bostanchi, head of Iran’s Council of Industries, confirmed in an interview from Tehran that businesses and industries are preparing for a sharp decline in demand. He anticipates greater obstacles in sourcing goods from abroad and stricter limitations on insurance, banking, and shipping services.
“These restrictions create a spillover effect,” Mr. Bostanchi explained. He emphasized that small and medium-sized enterprises, which constitute over 90 percent of Iran’s industrial units and nearly half of its industrial employment, would face the most intense pressure.
Leily Nikounazar contributed reporting from Belgium.
Correction: An earlier version of this article incorrectly stated when sanctions were to be reimposed on Iran. They were set to take effect on Saturday, not Sunday.