Why are there sanctions on Iran and when could they be lifted?

Why are there sanctions on Iran and when could they be lifted?

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Daniel Tester
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Fri, 07/17/2026 - 11:03

For nearly 50 years the West has targeted Tehran, citing its nuclear ambitions, links with armed groups and human rights abuses

Two Iranian men exchange rials against US dollars at an exchange shop in Tehran in August 2018 (AFP)

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US President Donald Trump has called for further sanctions against Tehran amid fresh US strikes on Iran.

“Republicans should add Iran to the Russian Sanctions Bill,” Trump said on social media on Sunday, referencing a much-delayed bill that aims to target Moscow financially for its invasion of Ukraine,

It’s but the latest move against Iran under one of the broadest sanction programmes imposed by the West worldwide.

The embargo regime introduced by the US, plus the more limited measures imposed by the UN, EU and others, have resulted in massive restrictions on Iran’s ability to trade oil and access the international financial system, devastating its economy for years.

The sanctions have been imposed for several reasons according to Washington and others, including Iran’s alleged development of nuclear weapons to its poor human rights record and support for regional groups such as Hamas and Hezbollah. 

Today, they are a key bargaining chip on the table in negotiations to end the US war on Iran, used by the US to pressure Tehran to scale back its nuclear programme.

Here, Middle East Eye explains how the sanctions came about, and whether they could be lifted in the current negotiations. 

When did the US first impose sanctions imposed on Iran? 

Sanctions were first imposed on Iran by the US in November 1979 when Iranian students seized the US Embassy in Tehran after the Iranian Revolution, taking 52 Americans hostage.

The measures froze more than $8bn of Iranian assets held in US banks. This was extended in April 1980 to include a full ban on US imports of Iranian goods and services.

In 1981 the sanctions were eased and most of the frozen assets returned under the Algiers Accords, which brought an end to the hostage crisis.

But in 1984 the US reimposed an arms embargo, designating the Islamic Republic a “state sponsor of terror” amid the Iran-Iraq war.

Sanctions were initially imposed on Iran by the US amid the hostage crisis of 1979 (left) and the attack on the US Martine barracks in Beirut in 1983 (right, AFP)

The move came after the 1983 bombing of the American and French barracks in Beirut, which Washington linked to the Iran-backed armed group Hezbollah.

US sanctions expanded in the coming decades amid growing fears about Iran developing nuclear weapons. 

In 1995, US President Bill Clinton passed executive orders placing a total ban on all US trade with and investment in Iran. 

He then passed the Iran and Libya Sanctions Act in 1996, which sanctioned foreign firms investing in Iran's energy sector. These sanctions, known as secondary sanctions, cut Iran off from much of the global oil trade.

The sanctions were set to expire after five years, but the act has been continually renewed, although provisions on Libya have mostly been dropped. 

What about UN sanctions?

The UN Security Council has also imposed more limited sanctions on Iran.

The first of these came in 2006, after the International Atomic Energy Agency referred Iran to the UN Security Council over concerns about its uranium enrichment programme and its failure to cooperate fully with UN nuclear inspectors.

The measures were expanded throughout the 2010s, although limited to an arms embargo and asset freezes against individuals and companies alleged to be involved in Iran’s nuclear programme. 

Unlike US sanctions, all countries are obliged to enforce UN measures under international law – but certain countries, such as Russia, have rejected several of the UN measures.

Who else has imposed sanctions?

In 2008, Iran was blacklisted by the Financial Action Task Force, the international agency principally backed by western states that targets money laundering and terrorist financing. 

The move further hurt Iran’s access to the international financial system and caused problems for businesses wanting to trade with Iran. Today, it is one of just three states on the list, alongside Myanmar and North Korea.

In 2012, the Swift payment transfer system, which is used by banks for international transactions, cut off Iranian access amid pressure from the US, financially isolating it still further.

The EU introduced its own sanctions against Iran that same year amid concerns about its nuclear programme, embargoing oil exports and freezing assets held in European banks. The EU had previously been the largest recipient of Iranian oil. 

Since then, the EU has deepened sanctions over human rights abuses in Iran during the 2022 and 2026 anti-government protests, and over Iran’s ties with Russia amid its invasion of Ukraine. 

Why were many sanctions axed in 2016?

Most nuclear-related US, UN and EU sanctions were gradually lifted under the Joint Comprehensive Plan of Action (JCPOA), an agreement between Iran and the US, UK, France, Germany, Russia, China and the EU which began to come into effect in January 2016.

It was signed after years of negotiations to limit Iran’s nuclear program led by the US during the Obama administration. 

Under the deal, Iran agreed to limit its uranium enrichment and allow international nuclear inspections, primarily in exchange for relief from sanctions.

Iranians celebrate in Tehran amid the nuclear deal struck in Vienna in July 2015 which potentially would see an end to sanctions (AFP)

The JCPOA marked the biggest diplomatic breakthrough between Iran and the West in decades, returning tens of billions of dollars of frozen assets to Iran and restarting Iranian oil exports. 

But the deal unravelled when US President Donald Trump withdrew in May 2018 and reintroduced wide-ranging US sanctions on Iran. 

Washington said that the deal, which had been negotiated by the previous Democrat administration, would still allow Iran to develop a nuclear weapon, and that failure to act would prompt a “nuclear arms race in the Middle East”. Iran responded by increasing uranium enrichment beyond the limits set out in the deal.

In 2020, despite having already quit the treaty, the US attempted to initiate a “snapback” mechanism that would maintain some UN sanctions on Iran that were set to expire under the JCPOA. 

The move was rejected by the other signatories of the treaty – the UK, France, Germany, China and Russia – as unlawful, and the UN sanctions were lifted that year. 

But then, in August 2025, France, Germany and the UK changed their position amid fears about Iran’s growing uranium stockpile, triggering the snapback mechanism to reimpose UN sanctions on Iran despite opposition from China and Russia. 

The UK introduced its own sanctions on Iran in 2023, after Brexit meant that it was no longer bound by EU measures that primarily target individuals and companies that London alleges are involved in “hostile activities in the UK and around the world”.

Foremost among these was the Iranian Revolutionary Guards Corps (IRGC), the powerful hardline military organisation that has extensive political influence in the country and is deeply embedded in the Iranian establishment and wider society.

What has been the effect of the sanctions?

Iran’s economy has been devastated by the sanction regimes of the past half century, and has been largely cut off from global energy trade, despite being a major oil and gas producer.

To get around these, it exports discounted oil on the black market through a “shadow fleet” of aging shipping tankers, principally to China.

The US and EU measures also mean that Iran is effectively cut off from the international financial system. 

Humanitarian goods such as food and medicine are generally exempt from sanctions under international law. But banks and shipping companies often avoid handling such transactions because of the legal and compliance risks.

In Iran, this has caused massive inflation which contributed to the discontent and widespread protests in January 2026. 

Which sanctions might get lifted in the near future? 

Israel and the US attacked Iran in late February, with the two sides still engaged in hostilities.

For Tehran, sanctions relief has been a major aim during negotiations to end the war, and was at the heart of the Memorandum of Understanding (MoU) signed on 17 June.

The MoU also stated that the US will “terminate all types of sanctions against the Islamic Republic of Iran, including the United Nations Security Council resolutions, IAEA [International Atomic Energy Agency] Board of Governors resolutions, and all unilateral US sanctions, primary and secondary, in an agreed upon schedule as part of the final deal”.

It added that the US would “undertake” to release Iran’s frozen assets, held in banks around the world. Iranian lead negotiator Mohammad Ghalibaf said on 22 June that a deal had been reached to free $12bn in frozen Iranian funds. 

A smoke plume rises following a missile strike on a building in Tehran in March 2026 amid US and Israeli attacks on the country (AFP)

Trump later said that this money would be released on condition that it be used “to buy food, and the food’s going to be bought exclusively through the United States from our farmers,” a claim that Iran dismissed.

The US issued a 60-day waiver on sanctions of Iranian oil exports on 22 June in line with the agreement. 

All of this was negotiated in exchange for Iran placing limits on its uranium enrichment, and reopening the strategic Strait of Hormuz waterway. 

But the MoU has since frayed, with the US cancelling its sanctions waiver amid renewed attacks from both sides and statements from Trump saying the ceasefire is “over”. 

Meanwhile, the US has hit Iran with further sanctions and resumed its military blockade of Iranian ports, designed to thwart covert exports of Iranian oil.

What will it take to lift sanctions?

Even if a settlement is reached to end the war, an end to US-imposed sanctions still faces several issues.

The first is domestic, with many of the sanctions imposed through acts of Congress. That means they will require congressional approval to be overturned, including majority agreement from both the Senate and the House of Representatives. 

But many members of Congress are hawkish on Iran, and have previously opposed sanction-ending deals.

A second problem is the status of the IRGC, which is proscribed as a terrorist organisation by the US, EU and, since 13 July, the UK. As a result, even if sanctions are lifted, businesses could still face other legal restrictions on trading with entities deemed IRGC affiliates.

Members of Iran's Islamic Revolutionary Guard Corps (IRGC) during a military parade in Tehran in September 2019 (AFP/Iranian Presidency handout)

Thirdly, liftng UN sanctions will require approval from all five permanent members of the Security Council.

Of these, China and Russia have long been open to the idea of ending sanctions; the biggest challenge is approval from the US, UK and France.

The EU, meanwhile, has signalled that it is open to lifting sanctions related to Iran’s nuclear programme if Tehran gives evidence that it has curbed its uranium enrichment. 

But removing EU sanctions requires the unanimous consent of all 27 member states, and Kaja Kallas, the EU’s top diplomat, implied on 19 June that sanctions imposed due to Iran’s human rights record could remain in place. Brussels imposed further measures following the Islamic Republic’s crackdown in January 2026.

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