The GPM Global Forecast is a new bi-weekly, members-only article series for 2016. It will provide analysis and short-term forecasting on key military, political, and economic events around the globe.

Iran Enters a New Era as Nuclear Sanctions are Lifted

Background

The United States and EU have lifted economic sanctions on Iran following confirmation from the United Nations that the country is following through on its obligations set out in last year’s nuclear accord.

Outlook

Implementation Day arrived earlier than many expected, probably because the Iranian government wanted to rush sanction relief ahead of February elections, which won’t just determine the next parliament but also the Assembly of Experts – the clerical body that might be called on to pick Iran’s Supreme Leader should Ayatollah Khamenei die or step down in the next eight years.

One immediate impact of sanction relief is an increase in global oil supply. Iran used to be OPEC’s second-largest producer, and although its energy infrastructure is aging and investment-starved after years of sanctions, the country expects to sell an additional 500,000 barrels a day right out of the gates. The lifting of sanctions caused an immediate plunge in the stock markets of oil-producing Gulf states, with Saudi Arabia seeing a drop of 5.4% and Qatar 7% in Sunday trading.