On June 17, the United States and Iran signed a landmark Memorandum of Understanding (MoU) that carries the potential to upend the long-standing economic status quo of the Persian Gulf, unlocking new avenues for expanded bilateral and regional trade, as well as foreign direct investment into the Islamic Republic. At the core of this preliminary agreement is a sweeping commitment to roll back decades of punitive U.S. sanctions and reinsert Iran into the fabric of regional economic cooperation frameworks.
Under the terms laid out in the MoU, Washington will lift both primary and secondary sanctions on Iran, and establish a $300 billion reconstruction and development fund backed by the U.S. and its regional Gulf partners. For Gulf Cooperation Council (GCC) states, which have long balanced geopolitical tension with Iran against the untapped commercial potential of closer ties, the deal represents a potential turning point after decades of estrangement.
Qatar, one of the key mediators that brokered the agreement, has already moved to frame sanctions relief as a major economic opportunity. Speaking on the sidelines of this year’s G7 summit, Qatari Emir Sheikh Tamim highlighted that the deal would open “huge investment opportunities in Iran”, signaling that many Gulf capitals view expanded economic engagement as a tangible reward for successful diplomatic outreach. This momentum builds on the 2023 Iran-Saudi Arabia reconciliation deal, which saw Riyadh signal its readiness to launch large-scale infrastructure and investment projects inside Iran shortly after diplomatic ties were restored. At the time, Saudi Finance Minister Mohammed al-Jadaan noted that investments could roll out “very quickly” once diplomatic relations were normalized, but those plans never materialized, held back largely by the continued weight of U.S. secondary sanctions that deterred major Saudi and international firms from entering the Iranian market. The new US-Iran MoU seeks to remove that core barrier.
The preliminary text explicitly requires the full removal of all U.S. primary and secondary sanctions, and mandates that Washington issue all necessary licenses, waivers and regulatory approvals to enable unimpeded financial transactions between Iran and other regional states. Despite this clear framework, experts warn that full implementation will be a slow, gradual process, with significant lingering risks that will deter rapid large-scale investment.
Robert Mogielnicki, a non-resident fellow at the Arab Gulf States Institute, notes that even in the most optimistic scenarios, sanctions-related risk will not disappear quickly. Regional and international businesses remain deeply cautious about the long-term durability of any U.S.-Iran agreement, a hesitation rooted in the 2018 U.S. withdrawal from the Joint Comprehensive Plan of Action (JCPOA), the landmark Iran nuclear deal. Just three years after that agreement was signed, Washington walked away and reimposed crippling sanctions, forcing global multinationals including Boeing to exit the Iranian market almost overnight.
Ali Ahmadi, executive fellow at the Geneva Centre for Security Policy, explains that memories of that collapse have left lasting scars on investor and banking confidence. “Even before the U.S. withdrew from the JCPOA, fears of a future pullout meant international markets were hesitant to lend to Iran,” he said. He added that years of suspended financial links between Iran and the global banking system mean rebuilding those connections will not be quick or simple, especially for large global banks with heavy exposure to U.S. dollar regulation and regulatory risk.
As a result, industry analysts broadly agree that large-scale cross-border regional investment into Iran will expand gradually, as confidence rebuilds and the financial infrastructure needed to support transactions is reconstructed. In the near term, growth will be concentrated in existing small and medium-volume trade routes, with sectors including consumer goods, electronics, automobiles, medical supplies, pharmaceuticals and construction materials poised to see immediate expansion.
Iraq, alongside the Kurdistan Regional Government, will also play a central role in this early growth, notes Amanj Yarwaessi, director of the MEED Foundation. Baghdad and Erbil already maintain high-volume trade links with Iran, supported by established cross-border transport infrastructure, multiple official border crossings, and deep-rooted private sector relationships that have persisted through years of sanctions and tension.
Notably, all six GCC member states have publicly welcomed the June MoU, a show of unified diplomatic support that comes even as the bloc has faced months of direct Iranian missile and drone attacks targeting GCC territory starting in late February. Alongside Qatari and Pakistani mediation that enabled the MoU, Gulf states have already taken tangible steps toward deeper engagement: Oman has held bilateral talks with Iran over joint management of the strategic Strait of Hormuz, and delegations from Doha, Muscat and Riyadh all attended the July 3 funeral of former Iranian Supreme Leader Ali Khamenei.
Mehran Haghirian, research director at the Bourse & Bazaar Foundation, explains that this unified GCC approach marks a clear shift from pre-2023 dynamics. “Qatar and Oman are not just representing their own interests, but those of the entire GCC,” he said, contrasting this with the split approach seen in years past, when even after the UAE-Iran reconciliation, Dubai expanded private trade with Tehran while Abu Dhabi continued to frame Iran as a core threat to regional security. Haghirian notes that recent regional conflict has forced that long-unresolved tension into the open, clearing the way for a coordinated GCC approach.
Still, analysts agree that the long-term success of Iran-GCC rapprochement will depend on whether economic progress can be matched by tangible progress on regional security. GCC states have made clear that large-scale long-term investment will not move forward unless Tehran provides credible assurances that it will halt attacks on GCC territory and de-escalate regional tensions.
Justin Alexander, director of Khalij Economics, argues that for Iran to unlock the full economic benefits of Gulf trade and investment, it will need to acknowledge the harm caused by recent attacks that have killed Gulf nationals, and make binding commitments to avoid future aggression. Despite these significant security and implementation hurdles, the underlying commercial incentives for closer regional integration remain strong for both Iran and its Gulf neighbors.
Decades of geographic proximity, pre-existing trade networks, and deep people-to-people business connections have created a foundation of commercial links that have persisted through years of strained diplomatic relations and repeated rounds of U.S. sanctions. These existing connections, spanning traders, logistics providers, distributors and cross-border investors, mean regional integration can build on existing infrastructure rather than starting from zero. If security concerns can be addressed and sanctions risks are gradually eliminated, this foundation could support rapid expansion of economic ties across the Gulf.