Iranian President Hassan Rouhani vowed that his country would resist tough new U.S. sanctions on Iran’s oil and banks on Monday, as Tehran braced for a new era of political and economic isolation.

“Unfair sanctions are against the law, U.N. resolutions and international accords. Therefore, we will proudly break the sanctions,” Mr. Rouhani said on national television after the sanctions took effect at the stroke of midnight in Washington, or 8:30 a.m. in Tehran.

The sanctions signaled the end of American involvement in a multinational nuclear accord and punctuated the political realignment in the Middle East, with the U.S. and allies like Saudi Arabia and Israel lining up against Iran. The sanctions threaten to reduce Iran’s exports to the global oil supply and jolt a large regional economy that was already buckling.

Oil prices had risen in recent weeks in anticipation of the sanctions. Brent crude, the international benchmark, was up 0.91% to $73.52 on Monday.

The U.S. has scrambled to ensure a well-supplied oil market in the event of Iranian declines, and Saudi Arabia—the world’s biggest crude exporter—has vowed to step up output to fill the gap.

Mr. Rouhani said Iran’s oil industry had already shown its resilience, pointing to waivers that the U.S. granted last week to eight countries allowing them to continue importing Iranian crude and not be penalized. The U.S. had pushed countries to cut their purchases to zero by Sunday.

The U.S. didn’t name the countries granted exemptions, although China, Turkey and India were considered likely recipients.

“The Islamic Republic can sell its oil, and even if these eight countries weren’t exempted, we would have still sold our oil,” Mr. Rouhani said. “Isn’t that success?”

With the new restrictions, companies and governments aren’t allowed to buy Iranian oil or do deals with Iranian banks, insurers or shippers that facilitate the oil trade, unless they get permission from the U.S. Treasury Department. If they ignore the sanctions, they could face penalties including large fines and exclusion from the U.S. financial system.

Monday’s sanctions were a milestone for President Donald Trump, who saw the nuclear deal, reached in 2015 under the Obama administration, as flawed from the start. By not curtailing Iran’s ballistic missile program and not addressing its military activities in Syria, Yemen and elsewhere in the Middle East, Mr. Trump argued, it failed to allay a chief concern about Iran: that it seeks Israel’s destruction.

Israeli Defense Minister Avigdor Lieberman on Monday called the decision to reinstate sanctions “the sea-change the Middle East has been waiting for.”

The United Arab Emirates, a staunch U.S. ally, also praised the move, while Syria, an Iranian ally, said it would stand behind Tehran.

The sanctions could deepen the jeopardy that Iran’s leaders already found themselves in amid a litany of economic woes.

This year, inflation has soared to near 30%, unemployment is in the double-digits, the currency has lost value rapidly against the dollar and economic growth is expected to be negative. A wave of popular unrest not seen in almost a decade swept the country in late December, focusing initially on economic problems before crescendoing into a critique of the ruling system.

Far from altering their regional military posture or getting rid of ballistic missiles, Iranian leaders have vowed to stand up to the U.S. After Mr. Trump tweeted an image of himself Friday on a Game of Thrones-themed poster captioned “Sanctions Are Coming,” Gen. Qassem Soleimani, the leader of Iran’s elite Quds Force, posted a similar picture of himself captioned, “I Will Stand Against You.”

Mr. Rouhani said Monday that Iran would emerge victorious, and urged unspecified action to counter U.S. pressure.

“It’s not going to work out only through words,” he said. “Action means putting pressure on the U.S. so it doesn’t dare to continue with its plots.”

Mr. Rouhani, a relative moderate in Iran’s system, staked his legacy on the 2015 nuclear deal with six world powers, including European countries, Russia, China and the U.S. The deal technically remains in place, as Tehran continues talks with European signatories to try to maintain some of the benefits under it. But with the U.S.’s withdrawal announced in May, Mr. Trump has in practice nullified the most significant benefits Iran received in exchange for curbs on its nuclear program.

Switzerland’s economic affairs agency said Monday that it was in contact with authorities in the U.S. and Iran, as well as with Swiss companies in the pharmaceutical and food sectors, in order to develop a payment channel that would allow for the provision of medical care and food to Iran.

But with the U.S.’s withdrawal announced in May, Mr. Trump has in practice nullified the most significant benefits Iran received in exchange for curbs on its nuclear program.

Iran has pledged to remain in the deal for now, but Iranian Foreign Minister Javad Zarif said in May that the country could quickly scale up its nuclear program beyond the limits prescribed if the accord falls apart. The country opened a new factory for uranium enrichment centrifuges in June.

Mr. Zarif tweeted Monday that the U.S.’s reimposition of sanctions defied the United Nations’ top court and the Security Council. “The US—& not Iran—is isolated,” he wrote.

Source » wsj