The Gulf Projects Index declined by 0.5 per cent in the week ending 5 January, weighed down by Iran’s projects market, which contracted by 7.5 per cent.

Iran saw $15.8bn wiped off its projects market as two schemes were cancelled and another 11 were put on hold, including the local Bakhtar Petrochemical Company’s Andimeshk low-density polyethylene plant.

The petrochemicals facility, which was being built in Iran’s Khuzestan province, saw significant construction work before being put on hold. Officials connected to the project have blamed international sanctions and financial pressures for the delay.

Plans to develop Iran’s North Pars gas field have also been put on hold as its developer, Pars Oil & Gas Company, focuses on developing the South Pars gas field. North Pars is one of the biggest independent gas fields in the world and is located in the Gulf, 120 kilometres southeast of Bushehr.

The contraction in Iran’s projects market is the biggest the country has seen in at least five years and comes after a 4.6 per cent decline in the week ending 29 December. Low oil prices are putting extra pressure on Tehran’s budget, adding to economic problems caused by sanctions, corruption and mismanagement.

On 4 January, Iran’s President Hassan Rouhani called for an end to Tehran’s isolation. “Our political life has shown we can’t have sustainable growth while we are isolated,” he said. Rouhani also called for Iran’s economy to be overhauled and for the private sector to play an increased role.

Saudi Arabia, Qatar and Oman also saw declines. The biggest gainer was Kuwait, which added $1.8bn to its market. Iraq and the UAE expanded by 0.6 and 0.1 per cent respectively. Bahrain was flat.