Iranian nuclear deal held hostage by Russia 

The U.S. attempted to ease tensions with both Iran and Venezuela in recent weeks, hoping both to undermine Russia’s political relationships with the countries, as well as to identify alternative oil and gas reserves for export. Iran is home to the second-largest proven gas reserves and is one of the top OPEC+ crude oil producers. Consequently, bringing the nuclear deal back into play would significantly support the Iranian economy, which has been battered by U.S. sanctions since late 2018. Russia’s decision to veto the deal sent global crude oil prices rising even further, as most analysts had priced in a deal being reached sometime in the coming months.  

Looking ahead, Iran’s economy is still expected to grow at a solid pace next Solar Hirji (SH) year (April 2022 to March 2023), but the latest decision from Russia has likely weighed heavily on prospects for stronger growth. Meanwhile, theMiddle Eastern and North African (MENA) region as a whole is set to benefit from the current geopolitical turmoil, as global crude oil and gas prices continue to edge higher, which should support the public coffers of governments in the region, broaden diversification efforts and see the implementation of key economic reforms. Our panel of analysts expect the Iranian economy to grow 3.0% in SH 2022. Moreover, our panel of experts see the MENA region expanding 4.4% in 2022. 

  • Insights from Our Analyst Network

Commenting on the potential lifting of U.S. sanctions on Iran, economists at Goldman Sachs noted: 

“A deal to return to the JCPOA agreement with Iran could help bring additional barrels to the global market, which we now conservatively base-case. Despite headlines that Russia could derail an agreement, the issuance of export waivers remains a unilateral U.S. decision. We reiterate our view, however, that the associated ramp-up in Iran oil flows would neither be large nor immediate, with implementation and certification leaving for a Q3 2022 ramp-up in exports, even if a deal were to be signed now.” 

On Iran’s economic outlook given a return to the 2015 accord, Daniel Richards, MENA economist at Emirates NBD, noted:  

“Iran boosted oil production in 2021 as it produced an average 2.43 (mbpd), compared with 2020’s 1.97 (mbpd)—growth of 23.4%. […] Should a deal be reached, however, then there is substantial upside potential for the Iranian economy. Current production is far off the 2018 levels of 3.8 (mbpd), and a renewed inflow of FX receipts and foreign investment would provide a substantial boost to economic activity.” 

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.

Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest