The reimplementation of U.S. sanctions on Iran will benefit the hard-line faction within the Middle East country, according to the Washington, D.C.-based National Iranian American Council (NIAC).
The non-profit group — which aims to represent Iranian Americans — added that the sanctions could also isolate the United States and increase its reliance on Saudi Arabia in the region. Policy Director Ryan Costello told CNBC Monday that the current president of Iran, Hassan Rouhani, is a relative moderate in Iran's political elite who may have to adopt a tougher stance if he is to retain his political influence.
"Rouhani really has had the rug pulled out from in terms of sanctions … When you look at the forces who have benefited from this decision it is the IRGC (Islamic Revolutionary Guard Corps) who have benefited," Costello said in a phone call.
"You are kind of likely to see a rally around the flag with this and the moderate wing of the Rouhani government will also have to move more in line with the hardliners," he added.
The Trump administration has reinstated all sanctions removed under the 2015 nuclear deal, targeting both Iran and states that trade with it. The policy director said the sanctions "snapback" will allow the Iranian government to shift blame on the U.S. as the cause of domestic suffering, especially should shortages of food and medicines become more acute.
Under pressure from the United States the Iranian rial has weakened. The currency has lost approximately 70 percent of its value against the dollar since the beginning of 2018 on the unofficial market, according to the website Bonbast.com.
More than 300 new targets have been included in the latest U.S. sanctions that restrict activities of entities such as energy firms or banks, individuals, sea vessels and aircraft. Only a small number of countries have been granted waivers by the United States to continue to buy oil or do other business with Iran.
In a briefing to foreign press, the U.S. Secretary of State Mike Pompeo said the intention is to leave Iran with no oil revenue to spend on "terrorism, missile proliferation, regional proxies, or a nuclear program."
The message had an immediate effect on the Belgium-based financial messaging service SWIFT, which said Monday it would suspend access to "certain Iranian banks," without specifying exact names.
Costello said that while U.S. concern over Iranian human rights abuses and their role in sponsoring unrest in the Middle East was "undoubtedly based in fact," it was clear the U.S. was only highlighting instability arising from Iran and not its neighbor Saudi Arabia.
"The U.S. administration has banked on Saudi Arabia to pump more oil to keep pressure on Iran. I think the U.S. position in the region is already backfiring and will continue to do so," he said.
Oil prices rose during Monday's trading session. By around 3:00 p.m. London time, WTI was higher by nearly half a percent while Brent Crude had risen almost 1 percent on the day.