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Iran is often described as a sleeping economic giant. The country of over 85 million people holds vast oil and gas reserves, as well as occupying a strategic location linking the Middle East, Central Asia, and Europe. Even so, the nation trades far below its potential because of decades of sanctions.
The scale and persistence of the recent protest movement has revived hopes of a future inflection point — one that could force a political break and, eventually, a reopening to trade. If that happened, the consequences would extend far beyond Iran’s borders.
After decades of isolation, the country could be re-plugged into the global financial system. Banks could reconnect to SWIFT, oil exports could flow without restraint, and foreign direct investment could return at scale. This would not merely be a domestic recovery. It would be a shock powerful enough to reorder trade, energy, and capital flows across the Middle East.
A one-year shock
In the immediate aftermath of any diplomatic or political breakthrough, the lifting of sanctions would likely trigger a rapid rebound — like a tightly wound coil suddenly being released.
Iran’s non-oil trade, long capped at around $100bn (€85bn), could expand sharply. Estimates of latent capacity run as high as $182bn (€155bn) once restrictions are removed, although this figure is exposed to a number of variables.
A key early driver would be Iran’s reconnection to the SWIFT global payments system. Under sanctions, transaction costs have been pushed higher through informal and shadow-banking channels. Restoring normal access could cut those costs, unleashing pent-up demand and fuelling an import surge in the first year — particularly for capital goods, industrial machinery, and higher-end consumer products needed to modernise Iran’s ageing infrastructure.
Early regional spillovers
The regional effects could be swift, and Turkey, as Iran’s main land gateway, would be among the first beneficiaries. Rising demand for Turkish consumer goods and services could notably translate into a tourism boost.
Iranians previously constrained by currency controls — and still facing visa hurdles for Europe — would be expected to travel in larger numbers to Istanbul and Antalya.
At the same time, European and American cultural tourists could slowly begin returning to Iran.
Analysts estimate that within the first year, 5–7% of Turkey’s cultural tourism market could tilt towards destinations such as Isfahan and Shiraz. With a large portion of Iran’s aircraft grounded due to ageing fleets, Turkish airlines would likely step in, adding daily routes.
For Iraq and Pakistan, the gains could be more macroeconomic if the Iranian regime fell. Stable, direct energy supplies from Iran would lower production costs and ease inflation.
Energy market shock
The impact may be felt most sharply in energy.
Iran’s return could add up to 1.5 million barrels a day of crude to global supply. Unless OPEC+ moved to offset the increase, analysts warn oil prices could fall by around 10% — a windfall for importers such as Turkey and Pakistan, but a squeeze on the budgets of producers including Saudi Arabia and Kuwait.
In gas, too, the balance could shift. Iran’s re-entry would challenge Qatar’s long-standing dominance of the shared North Dome/South Pars field, as international energy companies return to the Iranian side of the reservoir — a development that could rebalance the region’s energy hierarchy for the first time in decades.
Logistics, money and the first reshuffle
Beyond trade and energy, Iran’s return would reorder regional logistics.
For Azerbaijan, road traffic at Iran’s north-western borders could rise, turning the country into a critical transit bottleneck between Iran and Russia. That would recast Azerbaijan from a pure energy producer into a strategic Eurasian corridor.
Gas swap arrangements — with Iran supplying Azerbaijan domestically while Baku exports equivalent volumes to Europe — could also move forward, alongside long-delayed power-grid links between Iran, Azerbaijan, and Russia.
The five-year contest
If Iran clears key hurdles — attracting more FDI, addressing anti-money-laundering banking obstacles, and avoiding domestic gas shortages — the region would enter a second phase. This would be less about shock, and more about competition and integration.
Cheaper Iranian energy and direct land access could steadily erode Turkish market share in Iraq, Syria, and Central Asia. Large Turkish manufacturers — particularly in textiles and appliances — could respond by shifting production into Iranian free zones to cut costs, while keeping higher-value design and components at home.
Iran–Iraq ties could also deepen into infrastructure integration. The Shalamcheh–Basra rail link could turn Iraq into a transit route for Iranian goods heading towards Jordan and the Mediterranean. Joint industrial zones along the border — pairing Iraqi capital with Iranian energy — could reduce dependence on distant suppliers.
Dubai would cement itself as the financial exit hub for internationalised Iranian firms. Start-ups and tech companies scaling up in phase one may look to Dubai for listings, capital raising, and exits. As low-margin goods trade fades, Jebel Ali would focus on high-value logistics tied to the Iranian market.
Pakistan, meanwhile, may face competition between Gwadar and Iran’s Chabahar port. Without rail integration into Iran’s logistics network, Islamabad could risk marginalisation. Completing the Iran–Pakistan gas pipeline, however, would revitalise textile hubs in Sindh and Punjab, boosting exports to Europe.
Oman would quietly strengthen its role as an Indian Ocean logistics partner. Ports such as Duqm and Sohar, outside the Strait of Hormuz, would lower shipping risk and insurance costs for Iranian trade.
For Qatar and Saudi Arabia, Iran’s return would intensify competition. Both could be pushed towards technology-driven efficiency and pricing strategies to defend Asian market share. Iran’s cheaper gas feedstock could undercut Saudi petrochemical margins, increasing rivalry for investment in China and India.
Kuwait, recognising that Iran-Iraq rail routes would dominate northern Gulf logistics, may also pivot away from infrastructure competition and towards capital deployment, using its sovereign wealth fund to buy strategic stakes in Iranian and Iraqi energy and transport projects.
Structural risks
None of this is guaranteed.
Iran would need billions of dollars to modernise its oil sector, railways and infrastructure, and failure to secure capital would leave it outpaced by better-funded rivals. Inflation remains a threat. If left unchecked, it would erode Iran’s cheap-labour advantage. And any renewed geopolitical instability could quickly push neighbours back towards bypass strategies.
Much of the Middle East is already drifting towards deeper economic integration. If Iran manages these risks, analysts say it could, within five years, anchor itself as a central production and transit hub across Eurasia.
If it fails, it risks becoming something far less transformative — a low-cost corridor that mainly fuels the growth of its neighbours.
Either way, Iran’s return would mark one of the most consequential geoeconomic shifts the region has seen in decades.