An Iranian oil worker bikes through the Tehran oil refinery in December 2014. (Vahid Salemi/AP)

This post has been updated.

Iran is about to get a refresher course in the capricious nature of the oil market and the durable nature of economic sanctions.

When U.S. and other international sanctions were tightened in 2012 and took nearly 700,000 barrels a day of Iranian crude oil off world markets, the price of an average barrel of OPEC oil ran $109.45.

But with the easing of those sanctions today, Iran is poised to boost its sales of oil in the middle of a massive glut, with the OPEC benchmark average barrel selling for just $25, less than a quarter of the 2012 level.

The result will be sharply lower revenue for Iran than its leaders anticipated two years ago when they began negotiations to end sanctions linked to the Iranian nuclear program. The oil glut will force a slower ramping up of Iran’s oil fields and exports than Iran had planned, and it could make international oil companies more wary and tight-fisted about making new investments.

“In many respects, this could not come at a worse time for Iran, because oil is at 11-year lows and the International Monetary Fund has recently offered quite dismal remarks about Iran’s banking system, economic growth prospects and tepid recovery,” said Elizabeth Rosenberg, director of the energy, economics and security program at the Center for a New American Security.

Moreover, the lifting of sanctions on Iran could heighten tension over reestablishing production quotas in OPEC — especially between Iran and Saudi Arabia, the cartel’s co-founders and longtime rivals. Eager to protect its market share, Saudi Arabia has been pumping at high levels despite calls by some OPEC members that the kingdom rein in output to prop up falling prices. Riyadh’s relationship with Tehran was further strained earlier this month when Saudi Arabia executed a prominent Shiite cleric and, after Iran’s condemnation of the execution, cut diplomatic ties.

The return of production in Iran would further fuel simmering tensions. The Iranian’s hinted that they might hold back.

“We don’t want to start a sort of a price war,” Mohsen Qamsari, director general for international affairs at the National Iranian Oil Company (NIOC), told Reuters on Jan. 6. “We will be more subtle in our approach and may gradually increase output,” Qamsari said. “I have to say that there is no room to push prices down any further, given the level where they are.”

Iranian officials earlier pledged to add a half-million barrels a day within six months and 1 million barrels a day in a year. But Bhushan Bahree, a senior director and OPEC expert at IHS Energy, said the consulting firm is forecasting an increase of only 400,000 barrels a day during the next six months.

“I think they’ll go in a little gradually both because it is in their interest to do so for price reasons and for its relations with others in OPEC, like Saudi Arabia,” he said.

For companies around the world, implementation day is like flicking the switch on Iran’s economic relations. Iran will be able to conduct banking transactions through the essential Society for Worldwide Interbank Financial Telecommunication, or SWIFT. Roughly $100 billion in frozen bank accounts will be released, though about half of it will go to pay debts or other commitments.

In addition, the U.S. Treasury Department, as agreed to under the nuclear accord, will lift sanctions that restricted foreign companies doing business with Iran in finance and banking, insurance, energy and petrochemical sectors, shipping and shipbuilding, gold and precious metals, and more.

Many of those companies have been visiting Iran already. For example, the Mediterranean Shipping Co. has resumed direct services to Iran after a three-year hiatus, according to Lloyd’s List, which tracks the shipping business. Lloyd’s also reported that the Maersk Group’s oil division has been talking with Iran about developing the country’s oil fields.

But for most American companies, the lifting of sanctions linked to Iran’s nuclear program will mean little. Many American citizens, companies and banks are barred from doing business with Iran under other sanctions, legislation and regulations tied to human rights, ballistic missiles and terrorism.

There are exceptions for those involved in aviation, health care or medical devices. Health care and medical devices were exempted for humanitarian reasons. Aviation sales are designed to bolster the safety of Iran’s aging fleet of Boeing passenger planes. Several companies have expressed interest in those sectors, according to consultants who spoke on the condition of anonymity to protect business relationships.

Pistachios and carpets, substantial export items for Iran, also are exempted from the remaining sanctions.

As of Friday, the Treasury Department was still completing regulations for the implementation of remaining sanctions. One item in particular — whether foreign subsidiaries of U.S. firms can conduct business with Iran — was being awaited by company executives to see whether it would be a minor exception or a loophole big enough for an oil tanker to sail through.

On Saturday, Treasury said it would issue licenses on a case-by-case basis but announced some guidelines, such as that foreign subsidiaries will not be able to sell Iran any goods with more than 10 percent U.S. content. The department also gave guidance on deals that can be conducted abroad in dollars, which must be cleared through American financial institutions.

But some ambiguity is likely to remain regarding how to define “activities with Iran” that are “consistent with” the nuclear agreement.

Even U.S., European or Asian companies seeking to do business in Iran face hurdles, however. One obstacle is that investors and traders will be prohibited from doing business with more than 200 Iranian or Iran-related individuals and entities who will remain on the U.S. “Specially Designated Nationals List.” Treasury said about 400 others were removed from the list.

Moreover, the country is plagued by high inflation, subsidies, difficulty getting permits and nonperforming loans.
Worse yet, the Iranian economy is dominated by opaque companies linked to the Revolutionary Guard Corps or the clerical establishment, notes Robert D. Hormats, vice chairman of Kissinger Associates. Many of their executives are on the Treasury’s list of prohibited individuals.

A system of “bonyads,” tax-exempt charitable institutions controlled by the clerics, was established after the 1979 revolution with assets seized from the royal family and wealthy individuals. Hormats said that the Mostazafin Foundation, also known as the Foundation for the Oppressed and the Disabled, has become the second-largest commercial entity in the country.

The bonyads report directly to the supreme leader and are believed to control 20 to 40 percent of the country’s overall wealth.

“It’s an alluring and attractive market because of the talent of the people, its diversity and its raw materials,” said Hormats, “but it is complicated because of the structure and because there are so many influential groups that have such power over individual companies and sectors.”

President Obama’s deputy national security adviser, Ben Rhodes, predicted that foreign companies would take a wait-and-see approach.

“It’s not going to be a flood. And frankly the Iranians know that because there’s still a tangled web of other sanctions,” Rhodes said at a Bloomberg News luncheon Friday. “People I think will want to see. One of the benefits of sanctions is it provides incentives for Iran to continue to [adhere to] the nuclear deal. Some companies are going to wait and see is this going to hold, are these guys going to stick to the agreement? So I think it will be a more incremental process.”