The diplomatic manoeuvring is over. As widely anticipated, a new layer of United Nations sanctions has been "snapped back" onto Iran, adding to the already stringent unilateral sanctions imposed by the United States. Though Russia and China attempted an eleventh-hour block at the UN Security Council, they failed to rally the necessary support, allowing the measures to come into force over the weekend.
On Monday, the European Council officially confirmed its own sweeping sanctions against the Islamic Republic. These will have significant and far-reaching consequences, hitting an Iranian state already reeling from a recent 12-day confrontation with Israel in June.
The "Snapback" sanctions—which are a specific mechanism within the 2015 nuclear deal (the JCPOA)—bring immediate and severe economic restrictions:
- Travel bans and asset freezes on key individuals and entities
- Severe restrictions on Iran’s trade, finance, and transport sectors.
- A freeze on the Iranian Central Bank’s assets overseas
- A ban on Iranian cargo flights to EU airports.
Iran had repeatedly warned the E3—the United Kingdom, Germany, and France—against triggering this Snapback mechanism, but to no avail.
In a dramatic response, the Iranian parliament is now threatening to exit the Nuclear Non-Proliferation Treaty (NPT). While some hardline MPs are pushing to go even further and begin steps toward producing a nuclear bomb, this is considered unlikely. Iran’s Supreme Leader, Ayatollah Khamenei, previously issued a "Fatwa" against developing weapons of mass destruction.
However, the risk of a new confrontation remains high. The U.S. has demanded that Iran hand over 450 kg of 60% enriched uranium to avoid such a scenario. Iran has completely dismissed this demand, vowing instead to defend the country against what it calls "aggressors."
The economic impact was immediate. Even before the sanctions officially took effect, the Iranian currency, the rial, entered a state of freefall. The plunging value of the rial against the US dollar is expected to push inflation even higher, with some analysts fearing it could reach 50%, making imports prohibitively expensive in the coming months. As of 15:00 GMT on Monday, 29 September, 1 US dollar was trading at 42,075 rials!
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Iranian state media has attempted to counter public anxiety, criticizing a section of the local press for spreading alarm. Officials are trying to downplay the influence of the sanctions, reminding the populace that Iran is "quite used to them for years, if not decades." When inflation begins to bite, however, public frustration—which is already palpable—could quickly spill over into street protests.
It's worth noting that Iran had a brief window to avoid this outcome. The E3 gave the country a 30-day period to present its own proposals, but the offer fell short of the E3’s expectations, possibly due to intense pressure from the U.S.
Iran has admitted it will face significant hurdles in selling its oil to international buyers and attracting investments to overhaul its aging infrastructure. Despite this, the government remains adamant that it can weather the storm, defying the expectations of political and economic analysts.
Surprisingly, the price of crude oil fell on Monday despite the anticipated supply shortages - at least, in the short term. As of 16:48 GMT, the price WTI and Brent were at $63.65 and $68.17 respectively. Analysts estimate that increased oil output by the OPEC+ will compensate for any potential loss of exports by Iran due to re-imposed sanctions.
