By Yasmine Ghania and Ahmed Tolba
DUBAI, Aug 28 (Reuters) - Iran condemned the United States' new economic sanctions on Friday as "state terrorism", while its supreme leader said he was banning acts that could harm "social cohesion" amid concern that more financial pain could spark unrest at home.
With the war now at the six-month mark, and negotiations at an impasse, President Donald Trump's administration has stepped up efforts to cripple Iran financially, with what it has billed an "economic D-Day".
The sanctions drive compounds the toll of the war on Iran's economy, where annual inflation hit 66% last month. The standoff over the Strait of Hormuz remains the conflict's biggest unresolved flashpoint.
Washington has warned countries to cut their business ties with Iran or face secondary sanctions, though the Treasury Department stopped short of actually imposing penalties.
Iran’s Foreign Ministry said in a statement on Friday that all countries were obligated under international law to refrain from implementing U.S. sanctions against Tehran, adding that participation in them amounted to complicity in imposing one state’s unlawful will on independent states.
It branded the new U.S. measures a "crime against humanity" that put the health and livelihood of millions of civilians at serious risk, and called on other nations and United Nations bodies to uphold the rule of law.
Supreme Leader Ayatollah Mojtaba Khamenei, who was injured and has not been seen publicly since the February 28 attack that killed his father, said in a written statement on Friday that he had banned officials from "committing anything that harms social cohesion".
He urged authorities to avoid any “discouraging statements that weaken national and public motivation," amid concern among Iran's leaders that more financial pressure on its war-battered economy could trigger protests.
Khamenei urged the government to seriously address economic and livelihood challenges, including inflation, unemployment, prices and the management of markets for goods and services.
NEW MEASURES TARGET EGYPTIAN BANK
Later on Friday, a U.S. official told Reuters the Trump administration plans to impose limits on Egypt's Banque Misr United Arab Emirates branches for doing business with Tehran.
The official said the proposed rule, if finalised, would withdraw Banque Misr UAE's ability to process transactions through U.S. financial institutions.
Treasury officials separately issued sanctions targeting one entity based in Hong Kong and one person linked to Iran's Bank Melli, according to a notice posted on the department's website.
With the U.S. focused on its economic pressure campaign, others have sought to revive diplomatic efforts to end the war.
Mediators have pushed to reopen the Strait of Hormuz, which handled 20% of world oil supplies before the war began six months ago and whose status remains the biggest obstacle to a peace deal.
Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani said he had stressed during talks with Iranian leaders in Tehran on Thursday the importance of returning to the pre-war status of open shipping through the Strait of Hormuz.
'PRESSURE DOESN'T WORK,' IRAN TELLS US
Iranian Foreign Minister Abbas Araqchi on Friday described the talks with Al Thani as "creative", and he renewed his appeal to the U.S. to stop putting military and economic pressure on his country and to resume negotiations.
"Putting diplomacy back on track isn't impossible. It hinges on U.S. understanding of one simple fact: pressure doesn't work," Araqchi said on X.
Qatar, a U.S. ally, and Pakistan helped broker a memorandum of understanding in June that led to a ceasefire but that quickly unravelled due to disagreements between Iran and the U.S. over the Strait of Hormuz.
IRANIAN LEVERAGE
After the U.S. and Israel launched the war on February 28, Iran threatened to strike any vessel transiting the strait without its authorisation, driving down traffic and sending up the price of oil.
The U.S. insists that the strait remain an open international waterway.
Mohsen Rezaei, secretary of Iran's Supreme National Security Council, said on Thursday Iran was preparing a list of conditions for reopening the strait. In the past Iran's conditions have included an end to the U.S. blockade on Iranian ports, compensation and removal of sanctions.
U.S. military commanders say American forces have cleared sea mines from the strait that had been laid months ago by Iran's Islamic Revolutionary Guard Corps.
Trump has repeatedly said the strait is open, but many vessels have opted against sailing through it because of Iranian threats, and ship tracking services have estimated activity at roughly 5% to 15% of normal volumes.
Preliminary shipping data released on Friday showed that only seven commodity vessels had transited the Strait of Hormuz on Thursday, down from 17 a day earlier and below the 10-day average of 15.
However, oil prices fell on Friday and were on track for a weekly drop, amid what analysts said were signs that more oil was flowing through the strait despite the diplomatic stalemate and that producers were increasingly adapting to the new realities in the Gulf region.
(Additional reporting by Ahmed Tolba and Enas Elashray in Cairo; Writing by Daniel Trotta and Gareth Jones; Editing by Kim Coghill, Sharon Singleton and Sanjeev Miglani)
