While Iranian officials have dismissed the snapback of United Nations sanctions as “ineffective,” in terms of economic impact—and Iran’s oil minister even claimed it would not affect crude exports—business leaders in Iran are warning of severe economic consequences.
On August 28, 2025, the United Kingdom, France, and Germany triggered a thirty-day process to reimpose United Nations sanctions on Iran, citing Tehran’s continued violations of the 2015 Joint Comprehensive Plan of Action, which was designed to prevent Iran’s development of nuclear weapons.
Since the European powers moved to activate the “snapback mechanism,” the Iranian rial has lost 14 percent of its value against the U.S. dollar.
The snapback would restore six U.N. Security Council resolutions adopted between 2006 and 2010, imposing sweeping restrictions that Security Council Resolution 2231 suspended following the nuclear deal. These resolutions include 1696 (2006) that demanded suspension of uranium enrichment, 1737 (2006), which froze assets and banned nuclear and missile-related entities; 1747 (2007), which expanded the sanctions to include Iranian arms exports while tightening financial restrictions; 1803 (2008), which introduced travel bans, banking restrictions, and augmented inspections; 1835 (2008), which increased international pressure; and 1929 (2010), the most comprehensive sanctions package, which included an arms embargo, banking restrictions, shipping and insurance bans, and the freezing of assets on Islamic Revolutionary Guard Corps-linked firms.
Since the European powers moved to activate the “snapback mechanism,” the Iranian rial has lost 14 percent of its value against the U.S. dollar in just one month, hitting nearly 1.08 million rials per dollar. Iran’s Chamber of Commerce recently warned the currency could slide to 1.65 million rials in the coming months if sanctions return. Inflation could reach 90 percent. Still, some Iranian lawmakers aligned with the government argue the move will have only “psychological” effects.
Although the U.N. measures primarily target Iran’s nuclear and missile programs, they also include critical provisions: heightened scrutiny of financial support for trade with Iran, such as credit lines and export insurance; oversight of financial institutions dealing with Iranian banks; inspections of Iranian aircraft and vessels; and bans on refueling or provisioning Iranian ships.
Iran’s state-owned shipping company operates 115 oceangoing vessels, ranking fourteenth globally and first in the Middle East. According to the Central Bank of Iran, service exports—dominated by maritime transport—generated about $11 billion last year, nearly double the 2020 figure. At the same time, Iran’s imports of services—mostly logistics—have doubled in four years to $23 billion.
Two trends explain this flow of shipping revenues and expenses: surging exports of sanctioned goods such as oil, petrochemicals, and metals, and the rising costs of evading U.S. sanctions. Iran frequently resorts to ship-to-ship transfers and rebranding of cargoes to conceal their origin.
If United Nations restrictions on servicing and refueling Iranian ships are reimposed, Tehran will face serious hurdles. Domestically produced fuel—whether fuel oil or diesel—does not meet the International Maritime Organization’s sulfur cap of 0.5 percent. As a result, Iranian vessels depend on bunkering in the United Arab Emirates or other foreign ports. Stricter enforcement would raise the costs of Iran’s foreign trade.
Beyond the United Nations measures, European Union sanctions—covering oil and petrochemical equipment, banking, transport, and insurance—also would be restored. This matters because the European Union remains Iran’s fifth-largest trading partner, with $5.8 billion in goods trade and $2 billion in services trade last year, the bulk in machinery exports and transport services.
Despite tightening U.S. sanctions, China has expanded oil imports from Iran. According to tanker-tracking firm Kpler, Iranian crude deliveries to Chinese ports have averaged 1.45 million barrels per day this year—a record for the eight-month period—and even hit 1.68 million barrels per day in August.
The return of international sanctions would leave China with little choice but to comply.
Beijing disregards U.S. unilateral sanctions, which it views as illegitimate. But the return of international sanctions would leave China with little choice but to comply. This is particularly sensitive since, under Iran’s current budget law, the Islamic Revolutionary Guard Corps—deeply involved in both the nuclear and missile programs—controls one-third of Iran’s oil exports, much of it shipped to China.
If China ignores the sanctions snapback, Chinese companies could face consequences from the European Union, the world’s largest provider of logistics and insurance services.
Meanwhile, United Nations restrictions on Iran’s shipping operations would curtail Tehran’s ability to disguise oil shipments and process payments through front companies in the United Arab Emirates, India, Hong Kong, and China, among others. And for Washington, the restoration of United Nations sanctions provides stronger grounds to pressure Beijing into cutting Iranian oil imports altogether.
Iranian officials may bluster to both their own public and foreign diplomats, saying they do not fear snapback sanctions. If they are truthful, they are naïve; if they are lying, they are foolish. The economic figures do not lie. Iran’s economy, already in dire straits, is about to get much worse.
