Iran’s economy, already grappling with severe water and power shortages, significant budget deficits, and a rapidly devaluing currency, is now poised for an even steeper decline.
On Sunday at 8 p.m., the United Nations Security Council is scheduled to reimpose stringent sanctions on Iran due to its nuclear program, after an intensive diplomatic effort during the General Assembly failed to reach an agreement this week.
These new UN sanctions are considerably broader than the existing American measures against Iran. They originate from an ongoing dispute with Europe regarding Tehran’s compliance with the 2015 nuclear agreement and Iran’s decision to deny access to international inspectors after alleged strikes by Israel and the United States in June.
The impending sanctions would freeze assets and prohibit travel for numerous Iranian entities and individuals. Furthermore, they would authorize countries to intercept and inspect cargo originating from Iran via air and sea on government-owned vessels, including oil tankers.
Additionally, the sanctions would forbid Iran from enriching uranium at any concentration, launching ballistic missiles capable of carrying nuclear warheads, and transferring expertise related to its ballistic missile technology. An existing arms embargo would also be reinstated.
Iranian President Masoud Pezeshkian labeled the proposed sanctions as “unjust and illegal.”
“They want to overthrow us,” he stated during a press briefing in New York on Friday. “If you were in our position, what would you do?”
Iran has not yet announced its response or whether it intends to retaliate against the new sanctions. President Pezeshkian indicated 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 global concern by removing crucial safeguards on Iran’s treaty commitments. However, the moderate President Pezeshkian dismissed this notion, stating it was not a viable option.
If implemented as planned, these sanctions will strike Iran at a particularly vulnerable moment.
The nation is still recovering from a fierce 12-day conflict with Israel in June, which concluded after the United States reportedly deployed bunker-buster bombs that damaged three of Iran’s nuclear facilities. For several months, the Iranian government has also been struggling with a severe energy and water crisis, leading to mandated cuts in supplies across many cities.
Naysan Rafati, a senior Iran analyst for the International Crisis Group, commented that while the UN sanctions “may not have the same financial impact as the U.S. measures currently in place, they significantly amplify the already considerable pressure on Iran’s economy.”
The 2015 agreement, designed to restrict Iran’s nuclear ambitions, had lifted UN sanctions imposed by the Security Council between 2006 and 2010. However, the accord included a “snapback” mechanism, allowing these sanctions to be reinstated if Iran breached the deal’s terms by the end of October 2025.
Had the deadline passed without intervention, the provision would have automatically expired, and the sanctions would have lapsed. Yet, in August, France, Britain, and Germany activated this mechanism, accelerating the deadline to September 28.
Europe accuses 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 amount, if weaponized, could enable Iran to construct several nuclear bombs. Furthermore, Iran has reportedly denied access to international inspectors following the recent airstrikes.
Iranian officials maintain that their nuclear program is solely for peaceful purposes. They assert that enrichment was accelerated only after the United States unilaterally withdrew from the nuclear accord in 2018 under President Trump, who famously called it “a horrible one-sided deal,” despite Iran being in full compliance. To adhere to American sanctions, European nations ceased trade with Iran. Iranian officials contend that by doing so, European powers effectively violated their obligations under the deal.
During the briefing, President Pezeshkian reiterated Iran’s stance against pursuing nuclear weapons and expressed bewilderment that the international community did not trust this claim. He also asserted that Iran would not passively accept the demands of the U.S. and European powers. “We will not accept this,” he declared.
European powers have also condemned 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 facilities.
Europe had presented three conditions for Iran to avert the new sanctions: grant immediate access to external inspectors; disclose the precise location of the 400-kilogram stockpile of highly enriched uranium; and initiate direct nuclear negotiations with the United States.
Mr. Pezeshkian affirmed Iran’s readiness to collaborate 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.”
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 had demanded the surrender of Iran’s entire 400 kg stockpile in exchange for a mere three-month suspension of snapback sanctions. Mr. Pezeshkian deemed this condition unreasonable.
Russia and China, Iran’s key allies and permanent members of the Security Council, attempted on Friday to postpone the sanctions by six months, proposing an April deadline. 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 expected to mitigate the impact of the sanctions by continuing trade with Iran. Russia and Iran share strong military ties, with Iran supplying drones to Russia for use in the conflict in Ukraine.
China and Iran also maintain robust economic connections. China remains the primary buyer of Iranian oil, purchasing crude at a discount of approximately 20 percent, which is crucial for keeping the Iranian government financially stable.
A senior official in Iran’s Oil Ministry, speaking via telephone, indicated that while the new sanctions would not halt China’s oil purchases, they would introduce additional obstacles. He suggested that China might leverage the situation to demand even greater discounts, possibly by raising concerns about Iranian oil tankers being intercepted and seized on international waters.
Some Iranian political figures have downplayed the sanctions’ potential impact, asserting that the country has already adapted to existing measures and will find ways to navigate the new ones. They also attributed blame to Western nations, claiming that Europe and the U.S. were never genuinely interested in 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, stated in a social media post. “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 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 of the new sanctions, with the rial dropping 4 percent. In the black market, the commonly accepted rate and a key inflation indicator, it fell to a microscopic 1,126,000 to the dollar.
For average Iranians, the announcement was a heavy blow. They are already contending with over 40 percent annual inflation, rising unemployment, and pervasive uncertainty about the country’s future. Many fear the possibility of renewed conflict with Israel and the U.S. as the government’s standoff with Western powers escalates.
Mehdi Bostanchi, head of Iran’s Council of Industries, stated in an interview from Tehran that businesses and industries are preparing for a decrease in demand and anticipate increased difficulties in sourcing international goods, alongside more restrictions on insurance, banking, and shipping.
“These restrictions create a spillover effect,” Mr. Bostanchi explained. He emphasized that the most significant pressure would fall on small and medium-sized enterprises, “which account for over 90 percent of Iran’s industrial units and about half of industrial employment.”