The Iranian economy is weaker because of low crude oil prices, but sanctions relief could help with recovery beyond 2016, the International Monetary Fund said.

The Iranian economy is expected to decline in terms of real gross domestic production from 3 percent to between 0.5 percent to -0.5 percent next year, depending in part on when sanctions are lifted, the IMF said.

A July nuclear agreement with world powers offers Iran widespread sanctions relief in exchange for commitments to allay concerns about a weapons program. A September report from analysis firm Verisk Maplecroft said sanctions on the conservative Islamic Revolutionary Guard Corps, which has considerable influence over the economy, could dampen some of the post-sanctions recovery prospects.

Martin Cerisola, assistant regional director for the IMF, said in a statement postponed investment decisions have slowed the Iranian economy.

"The economy faces severe structural challenges," he said. "The sharp decline in global oil prices has cooled off the momentum in economic activity."

The Organization of Petroleum Exporting Countries said in a monthly newsletter Iran is expected to start up dozens of oil and gas projects, worth an estimated $185 billion, by the end of the year. Iran's president cautioned the economy is too strongly linked to oil.

"The complexity and extent of the problems require strong political leadership and support for decisive and coordinated action," Cerisola said.

The IMF expects Iranian crude oil production to eventually increase by at least 600,000 barrels per day. Production of 2.86 million bpd is the highest for Iran since 2013.