Iran’s already precarious economic state, marked by severe water and power shortages, alarming budget deficits, and a rapidly depreciating currency, is now poised to worsen significantly.
The United Nations Security Council delivered a severe blow on Saturday, reimposing stringent sanctions on Iran due to its nuclear program. This decision followed the collapse of intense diplomatic efforts during the General Assembly meetings earlier in the week.
These newly reimposed U.N. sanctions are far more extensive than the existing American measures targeting Iran. They arise from a heated disagreement with Europe regarding Tehran’s compliance with the 2015 nuclear agreement. Compounding the issue, Iran had previously expelled international inspectors from its nuclear facilities in June, following coordinated strikes by Israel and the United States.
Secretary of State Marco Rubio announced that the U.N. sanctions officially took effect at 8 p.m. In his statement, Rubio declared, ‘This decision to reinstate these restrictions sends an unequivocal message: The international community will not tolerate threats or half-hearted compliance, and Tehran will be held responsible.’
The comprehensive new sanctions involve freezing assets and imposing travel bans on numerous Iranian entities and individuals. They also empower nations to intercept and inspect cargo originating from Iran, whether transported by air or sea on Iranian government ships, including vital oil tankers.
Furthermore, these sanctions strictly forbid Iran from enriching uranium to any degree, launching ballistic missiles capable of carrying nuclear warheads, and sharing technical expertise related to its ballistic missile program. An existing arms embargo has also been reinstated.
Iranian President Masoud Pezeshkian vehemently denounced the sanctions, labeling them ‘unjust and illegal.’
Speaking to reporters in New York on Friday, he asserted, ‘They seek to overthrow us. If you were in our position, how would you respond?’
Iran has yet to outline its potential retaliation against the new sanctions. President Pezeshkian indicated that a decision would be reached upon his return to Iran, following consultations with other officials. In a notable diplomatic move on Saturday, Iran’s Foreign Ministry recalled its ambassadors from France, Britain, and Germany for urgent discussions in Tehran.
Despite calls from hard-line factions within Iran to withdraw from the Nuclear Nonproliferation Treaty – a step that would undoubtedly escalate global concerns by eliminating key safeguards – President Pezeshkian, known for his moderate stance, firmly rejected this proposal, stating it was not a viable option.
These sanctions arrive at an exceptionally challenging juncture for Iran.
The nation is still recovering from a devastating 12-day conflict with Israel in June, which concluded after U.S. forces deployed bunker-buster bombs, significantly damaging three of Iran’s nuclear installations. Concurrently, the Iranian government has been struggling for months with a severe energy and water crisis, necessitating compulsory rationing of power and water across numerous 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,’ pushing it closer to a breaking point.
The 2015 nuclear agreement, designed to curtail Iran’s nuclear ambitions, had previously lifted U.N. sanctions imposed by the Security Council between 2006 and 2010. However, a ‘snapback’ mechanism within that agreement permitted the automatic re-imposition of these sanctions if Iran breached the deal’s terms by October 2025.
Had the original deadline passed without incident, the sanctions provision would have expired. Yet, France, Britain, and Germany activated the snapback in August, accelerating the deadline to September 28th.
European nations accuse Tehran of multiple violations of the 2015 accord, including boosting nuclear enrichment to 60 percent from 3.5 percent and amassing 400 kilograms of highly enriched uranium. This stockpile, they warn, could enable Iran to develop several nuclear weapons if it chose to weaponize its program. Furthermore, Iran’s refusal to grant international inspectors access to its nuclear sites after the recent airstrikes is a significant point of contention.
Iranian officials vehemently assert that their nuclear program is solely for peaceful applications. They argue that the accelerated enrichment was a direct response to the United States’ unilateral withdrawal from the nuclear accord in 2018 under President Trump, who famously labeled it ‘a horrible one-sided deal.’ Despite Iran’s full compliance at the time, the U.S. reimposed sanctions, prompting European compliance by ending trade with Iran. Tehran argues that this European action effectively constituted a breach of their own commitments under the original deal.
During the briefing, President Pezeshkian reiterated Iran’s commitment to not pursuing nuclear weapons, expressing his astonishment that this stance was met with global skepticism. He also made it clear that Iran would not passively accept the demands of U.S. and European powers, stating firmly, ‘We will not accept this.’
Adding to the tensions, European nations have strongly condemned Tehran’s post-airstrike decision to halt cooperation with the International Atomic Energy Agency, effectively blocking inspectors from Iran’s nuclear sites.
To avert the new sanctions, Europe had presented Iran with three specific conditions: grant immediate access to international inspectors, disclose the precise location of its 400-kilogram stockpile of highly enriched uranium, and initiate direct nuclear negotiations with the United States.
President Pezeshkian affirmed Iran’s readiness to engage with the Europeans, stating, ‘whether it’s with the international atomic agency, or about the stockpile of enriched uranium and the inspectors to come and investigate.’
Both in the briefing and in remarks to Iranian media on Saturday, he confirmed that Iran had agreed to negotiations and inspector access. However, he deemed the U.S. demand to surrender the entire 400-kilogram uranium stockpile in exchange for a mere three-month suspension of snapback sanctions as ‘unreasonable.’
Iran’s key allies, Russia and China, both permanent members of the Security Council, attempted on Friday to secure a six-month delay for the sanctions, extending the deadline to April. This proposal, however, was unsuccessful, facing opposition from nine countries, including Britain, France, and the United States.
Both Russia and China have publicly declared the snapback mechanism illegitimate, signaling their intent to mitigate the sanctions’ impact by maintaining trade relations with Iran. Russia, in particular, shares strong military ties with Iran, exemplified by Iran’s supply of drones for use in the conflict in Ukraine.
China and Iran boast robust economic connections, with China serving as the primary buyer of Iranian oil, securing crude at a roughly 20 percent discount. This crucial trade helps sustain the Iranian government’s economy.
According to a senior official from Iran’s Oil Ministry, speaking in a telephone interview, the new sanctions are unlikely to halt China’s oil purchases from Iran but will certainly introduce additional complications. The official suggested that China might leverage these sanctions to demand even deeper discounts, potentially citing risks associated with Iranian oil tankers being intercepted or seized on international waters.
Conversely, some Iranian political figures have downplayed the anticipated impact of the sanctions, claiming the country has already adapted to existing measures and will discover new ways to cope. They also pointed fingers at the West, arguing that Europe and the U.S. never genuinely pursued a diplomatic resolution.
Mahdi Mohammadi, a prominent conservative adviser to the head of Iran’s Parliament, declared in a social media post: ‘They have made their decision, now we must make our decision, too. The only way is to become strong to a level that erases the idea of Iran surrendering to the enemy.’
Despite these assertions, Iran’s economy has severely declined in recent years, a consequence not only of American sanctions but also of pervasive mismanagement and corruption. On Saturday, Iranian markets immediately reflected the news of the new sanctions, with the rial plummeting by 4 percent. In the black market—the widely recognized benchmark for inflation—the currency reached a staggering 1,126,000 to the dollar.
The news delivered a harsh blow to ordinary Iranians, who already contend with over 40 percent inflation, soaring unemployment, and deep uncertainty about the nation’s future. Many now dread the prospect of renewed conflict with Israel and the U.S. as the government’s standoff with Western powers persists.
Mehdi Bostanchi, head of Iran’s Council of Industries, stated in a Tehran interview that businesses and industries are preparing for a sharp drop in demand. They anticipate increased difficulties in sourcing foreign goods and foresee tighter restrictions on insurance, banking, and international shipping.
‘These restrictions generate a significant spillover effect,’ explained Mr. Bostanchi. He warned that small and medium-sized enterprises, which represent over 90 percent of Iran’s industrial units and roughly half of its industrial workforce, would bear the brunt of this intensified pressure.
Correction: An earlier version of this article incorrectly stated the effective date for the reimposition of sanctions on Iran. The sanctions were scheduled to take effect on Saturday, September 27, 2025, not Sunday.