Iran’s President Hassan Rouhani has vowed to “break” swingeing sanctions re-imposed by the US targeting core parts of the economy.
The Trump administration is restoring all sanctions lifted under the 2015 nuclear deal in a bid to pressure Iran.
They will hit oil exports, shipping and banks, and make it difficult to do business with the oil-rich nation.
US Secretary of State Mike Pompeo said Iran must “act like a normal country, or see its economy crumble”.
He told a press conference on Monday that more than 20 nations have already cut their oil intake from the Islamic Republic, and that exports have fallen by a million barrels a day.
Mr Rouhani earlier struck a defiant tone, saying Iran would “continue selling oil”.
“We will proudly break the sanctions,” he told a meeting of economic officials.
European countries which are still party to the accord designed to curb Iran’s nuclear activity say they will help businesses bypass the sanctions. But there are doubts about how successful this will be.
Even before the US sanctions were re-imposed, Iran’s economy had had a difficult year, with Iran’s currency, the rial, plummeting against the dollar, driving up the price of basic goods.
How did we get here?
US President Donald Trump withdrew the US from the nuclear accord earlier this year, an agreement he called the “worst deal ever negotiated”.
It offered Iran sanctions relief in exchange for reducing its nuclear development. The global nuclear watchdog, the IAEA, says that Iran has complied with the agreement.
President Trump says that he wants to get Iran back to the negotiating table.
His administration also says it wants to stop what it calls Tehran’s “malign” activities – including cyber attacks, ballistic missile tests, and support for terror groups and militias in the Middle East.
The president says his “maximum pressure” strategy is working. “[Iran] wanted to take over the whole Middle East. Right now they just want to survive,” he told a rally in Tennessee, Reuters reported.
What could the impact be?
The US reinstated a raft of sanctions in August, but analysts say this latest round is by far the most significant.
More than 700 individuals, entities, vessels and aircraft are now on the sanctions list, including major banks, oil exporters and shipping companies.
In addition, the Brussels-based Swift network for making international payments has confirmed it will cut off links with some Iranian banks, isolating Iran from the international financial system.
Secretary of State Mike Pompeo said the US aimed to reduce Iranian oil sales to zero.
He confirmed on Monday that the Trump administration has granted temporary exemptions to eight countries to continue importing Iranian oil – China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey.