Iran economic sanctions and oil market
Iran ready to pump 500,000 additional oil barrels a day in the already oversupplied oil marketHandout via Reuters

Iran has re-entered the world economy following its decade-long isolation, sending oil prices and Middle East stock markets tumbling. With UN-led sanctions lifted, Iran is gearing up to increase its oil output by 500,000 barrels a day and is also eyeing the implementation of a flurry of economic measures.

It is estimated that Tehran would be able to unlock nearly $100bn (£70bn, €91.8bn) of frozen assets as part of the financial windfall it has received, following the formal implementation of its nuclear deal with world powers. More than $30bn in foreign assets would be immediately available to Tehran as it comes out of economic hibernation.

Backed up by 38 million oil barrels in floating reserves, the country's banks are allowed to reconnect to the SWIFT international payment system. The SWIFT said in a statement: "Those banks that are delisted by the Implementing Regulation will now automatically be able to reconnect to SWIFT, following the completion of our normal connection process [i.e. administrative and systems checks, connectivity and technical arrangements]." A European oil embargo on Iran will also come to an end.

Iran, currently the world's fourth largest oil producer, has been reeling under double-digit inflation for the last few years due to the crippling sanctions imposed by the West over Tehran's ambitious nuclear programme. Economic clampdown on Iran was formally lifted on 16 January after the UN's nuclear watchdog said Tehran complied with the necessary conditions.

The Middle East heavyweight's rejoining of the world economy has already reverberated in the region. All seven stock markets in the Gulf states, including that of Dubai and Saudi Arabia, collapsed with the prospect of Iran injecting more oil into the global market.

On 18 January, oil prices hit another lowest since 2003, with Brent crude falling to $27.67 a barrel before stabilising at $28.56. Iran's re-entry has also come at a time when the market is suffering from chronic oversupply.

Iran's President Hassan Rouhani, who hailed the lifting of sanctions as "historic", has also sharply recalibrated his financial focus on foreign capital and non-oil exports when he presented the annual budget in Parliament on 17 January.

"Due to the public welfare, labour market conditions and employment needs of young people, access to high economic growth in the coming years is a necessity for the country," said Rouhani while announcing Iran's sixth five-year development plan.