Gulf states are not expected to drop their long-term monetary link to the U.S. dollar after the sharp drop in oil prices and fiscal reserves, Standard and Poor's said Tuesday.

"We expect (Gulf Cooperation Council) GCC countries to maintain the exchange rate peg over the medium term, mainly because we assess GCC states as having sufficient funds available to defend their currencies," the ratings agency said.

Growth in OPEC heavyweight Saudi Arabia will slow to its lowest rate in seven years, the International Monetary Fund said Tuesday, as oil prices continue their dramatic fall. 

Revising down its last forecast, the IMF predicted that the Saudi economy will grow by just 1.2 percent in 2016 -- compared with the 2.2 percent it estimated in October.

Russian gas giant Gazprom on Tuesday fired off a new salvo in Moscow's feud with Ukraine by demanding some $2.5 billion for Kiev allegedly breaching its supply contract. 

Gazprom said in a statement that under the terms of its deal with Ukraine state firm Naftogaz, Kiev had to buy a minimum annual amount of gas from them or face a penalty and that supplies had fallen short of the required level in the third quarter of last year. 

Oil prices recovered from 12-year lows in Asia Tuesday but remained below $30 a barrel, as Iran ordered a boost to crude production after the West lifted sanctions, exacerbating an already oversupplied global market.

Prices sank to depths not seen since 2003 on Monday, a day after the United States and Europe lifted the crippling economic sanctions in exchange for Tehran's compliance with a deal to curb the country's nuclear ambitions.

Iran on Monday ordered as planned an increase in its oil production of 500,000 barrels per day following the lifting of sanctions under its nuclear deal with world powers.

"With the removal of sanctions, Iran is ready to increase production by 500,000 bpd and today this order was issued," Rokneddin Javadi, the head of the National Iranian Oil Company and the deputy oil minister, said in a statement.

OPEC said Monday that it expects a "rebalancing process" to begin in 2016 as the sharp fall in the oil price causes production from non-cartel competitors such as the US to fall after seven years of "phenomenal" growth.

If the prediction is accurate, it would make a victory of sorts for OPEC's strategy of keep the oil flowing despite crude sliding to below $30 a barrel -- from over $100 in 2014 -- to defend its market share.

French President Francois Hollande pledged Monday to spend more than 2.0 billion euros ($2.2 billion) on a package of measures to fight stubbornly high unemployment.

Hollande said France was in "a state of economic emergency" and needed new measures urgently, but he promised that they would not be financed by tax rises.

Russian stock markets and the ruble fell further on Monday as the currency edged closer to a historic low on the back of a fresh slump in oil prices.

The ruble dropped at the start of trading to 78.85 to the dollar, nearing its record of just over 80 that it hit when the currency tumbled dramatically in December 2014.

Brent crude fell below $28 a barrel in Asia on Monday for the first time in more than 12 years on fears about a worsening supply glut after Western sanctions on Iran were lifted, allowing Tehran to resume oil exports.

Up to half a million barrels per day of Iranian crude could be added to already saturated markets after U.S. and European leaders ended a crippling embargo put in place over Tehran's nuclear program.

Iran needs annual foreign investment of $30-$50 billion to reach an eight percent growth target and cash in on a nuclear deal with world powers, President Hassan Rouhani said Sunday.

Laying out the budget for the next Iranian year which starts March 20, Rouhani told parliament, a day after the implementation of the historic deal, that the collapse in global oil prices meant the government had to look to abroad to boost the economy.