Iran greeted the re-imposition of US sanctions yesterday with air defence drills and an acknowledgement from President Hassan Rouhani the nation faces a “war situation”, raising Middle Eastern tensions as America’s maximalist approach to the Islamic Republic takes hold.

The sanctions end all the economic benefits America granted Tehran for its 2015 nuclear deal with world powers, though Iran for now continues to abide by the accord that saw it limit its enrichment of uranium. While for now not threatening to resume higher enrichment, Iranian officials in recent months have made a point to threaten that could resume at any time faster than before.

The new American sanctions particularly hurt Iran’s vital oil industry, a crucial source of hard currency for its anaemic economy. Its national currency has plummeted over the last year, sending prices for everything from mobile phones to medicine up.

“Today, Iran is able to sell its oil and it will sell,” Mr Rouhani vowed last night as the sanctions kicked in.

Iranian state television aired footage of air defence systems and anti-aircraft batteries in two-day military manoeuvres under way across a vast stretch of the country’s north.

The drill was to continue through today. Iranian army General Habibillah Sayyari said both the national army and the country’s paramilitary Revolutionary Guard were taking part in the exercise.

Mr Rouhani, meanwhile, pledged to government officials that Iran would overcome the sanctions.

“We are in the war situation,” Mr Rouhani said. “We are in the economic war situation. We are confronting a bullying enemy.”

He further stepped up the rhetoric, comparing Iran’s situation in the 1980s war against Iraqi dictator Saddam Hussein.

“Yesterday, Saddam was in front of us, today Trump is front of us. There is no difference. We must resist and win,” he said.

Iran is already in the grip of an economic crisis. Its national currency, the rial, now trades at 145,000 to one US dollar, down from when it traded 40,500 to $1 a year ago. The economic chaos sparked mass anti-government protests at the end of last year which resulted in nearly 5,000 reported arrests and at least 25 people being killed. Sporadic demonstrations still continue.

Mr Rouhani separately said leaders from “four powers” met with Iran on the sidelines of the September meeting of the UN’s General Assembly to try to save the deal, including brokering a possible meeting with Mr Trump. He did not name those countries, but was likely referring to China, France, Russia and Britain, which along with Germany made up the powers involved in the 2015 nuclear deal.

Iran’s Foreign Ministry spokesman Bahram Ghasemi also predicted the sanctions will actually work against America’s interests.

“Many countries from Europe to Russia and China have opposed the sanctions,” Mr Ghasemi told journalists, adding that Iranians “have experienced more extensive sanctions” and that they are “not a new issue”.

The US says the sanctions are not aimed at toppling the government, but at persuading it to radically change its policies, including its support for regional militant groups and its development of long-range ballistic missiles.

However, Mr Trump’s personal lawyer Rudy Giuliani and John Bolton, the president’s national security adviser, both have made public statements supporting overthrowing Iran’s government.

Israel’s Defence Minister Avigdor Lieberman welcomed the new US sanctions, saying they will deal a “critical blow” to Iran’s military presence around the Middle East.

The Trump administration’s decision to restore sanctions “is the sea change the Middle East has been waiting for”, he said.

Israel has been a fierce opponent of the 2015 nuclear deal from which the US withdrew in May, saying the accord failed to rein in Iran’s regional military threat.

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