After nine years of negotiations between Iran and leaders from the snappily-titled "P5 +1" nations – the US, the UK, France, Russia, China and Germany – agreed yesterday to lift sanctions on Iran. But what does that mean for the country's economy?
Sanctions were first applied to Iran in 1979, after the storming of the US embassy. Since then, they've been increasingly tightened – most notably, there is a ban on "the import or purchase of crude oil or petroleum products which are located in or which originated in Iran; and the provision of related financial assistance including insurance".
The deal will not only give a boost to an economy brought to its knees by 36 years of escalating sanctions, but also open up a market of 77m people to a global economy desperate for demand. Here's what happened when the sanctions were imposed.
Oil exports were hammered
Sanctions have been weighing on Iran for years, but the crippling measures it has been keenest to escape began in 2012, when the EU started its ban on importing petroleum from the nation. Since then, the effects have been marked. The chart below shows how many thousands of barrels of oil a day Iran sent to its main export markets over the five years to 2014.
On top of that, sanctions on Iranian business accounts and on investment in the country have meant proceeds from the oil Iran does sell are prevented from flowing back into the economy – meaning an estimated $120bn (£77bn) could gradually be allowed to flow back into the economy once sanctions are lifted.
GDP is down
Those restrictions on the petro industry have (as intended) hit the economy where it hurt, slashing GDP. The economy shrank 2.6 per cent between 2012 and 2013 – although that was admittedly an improvement on the 17.1 per cent drop between 2012 and 2013.
Inflation is soaring
Inflation in Iran has long been high compared to other oil-producing countries and the Middle East in general – it rose above 30 per cent in 2013, according to the World Bank, although other estimates put it at 40 per cent or higher. However, in recent months it has dropped off, falling to 16.2 per cent in May, according to Iran's Central Bank.
Disrupted supply chains and higher operating costs have kept the figure high, and prices can tend to shoot up without warning in the country. In one week the price of vegetables rose 99.5 per cent, fruit 66.6 per cent and the cost of chicken 30 per cent – the latter caused by delays in feed imports due to sanctions.
These are crushing figures for a country with an unemployment rate that could be far higher than the official 10.8 per cent quoted for the first quarter of 2015.
Rial at rock bottom against the dollar
Imports have become more expensive as the rial’s value dropped dramatically against the dollar, with the street real exchange rate rumoured to be worse still than the official figures suggest.
Consequently there's great demand for dollars on the black market, which in turn drives the value of the rial down. Currency speculators have made a killing, leading to temporary threats of death for currency speculation. The government later reversed that policy.
Relief for the Iranian people?
The exact details of sanctions relief and the deal itself are as yet unknown, but a lifting of sanctions will offer relief for the Iranian economy in the long term.
The deal will not only give a boost to an economy hit by 36 years of escalating sanctions, but also open up a market of 77m people to the global economy. Foreign brands will return to the country and exporters will be able to receive funds in their own Iranian bank accounts, and petro dollars will return. The process will be gradual, but the celebrations seen after the deal show hope is abound.