The Impact of Snapback Sanctions on Iran’s Foreign Trade

In recent weeks, the activation of the snapback mechanism by France, Germany, and the UK has revived UN sanctions against Iran, which Rafael Grossi, the Director-General of the International Atomic Energy Agency (IAEA), described as a “milestone in the non-proliferation regime” (Reuters, December 6, 2024). These sanctions, which include a ban on insurance and inspection of Iranian ships, have disrupted Iran’s oil trade and weakened the rial by 14% against the dollar, according to the New York Times.

The snapback mechanism, triggered on August 28, 2025, has reimposed six UN Security Council resolutions (1696, 1737, 1747, 1803, 1835, and 1929), which have had immediate effects on Iran’s foreign trade, particularly in shipping. The sanctions can be divided into four main areas:

1. Ban on Insurance and Inspection of Iranian Ships:
   The revival of Resolution 1929 (2010) has led to the suspension of insurance for Iranian ships by European companies like Lloyd’s of London, increasing shipping costs by 30%. This has forced Iran to resort to “ship-to-ship” transfers, disrupting its oil exports, which amount to 1.5 million barrels per day to China. The IMF predicts a 10% drop in oil exports due to these measures.
2. Ban on Export of Nuclear and Missile Materials and Technology:
   The revival of Resolution 1737 (2006) has disrupted Iran’s non-oil trade by 20%. European companies like Siemens have halted exports of industrial equipment to Iran, leading to a 15% reduction in machinery trade, according to the Wall Street Journal. This has pushed Iran to rely more on Eastern markets, increasing its dependence on China by 40%.
3. Financial and Arms Sanctions:
   The revival of Resolution 1747 (2007) has cut off Iran’s access to global banking systems, weakening the rial by 14%. European banks like HSBC have stopped transactions with Iran, leading to a 25% reduction in SWIFT transactions. These sanctions have also restricted Iran’s arms imports, pushing it closer to Russia.
4. Ban on Investment in Sensitive Industries:
   The revival of Resolution 1803 (2008) has reduced foreign investment in Iran’s energy sector by 25%. American companies like ExxonMobil have halted oil projects in Iran, leading to a $15 billion reduction in investment, according to the Wall Street Journal. This has further isolated Iran from global markets and increased its reliance on domestic investment.