Ultraconservative Ebrahim Raisi has been inaugurated as president of Iran, a country whose hopes of shaking off a dire economic crisis hinges on reviving a nuclear deal with world powers.

"Following the people's choice, I task the wise, indefatigable, experienced and popular Hojatoleslam Ebrahim Raisi as president of the Islamic Republic of Iran," Iran's supreme leader Ayatollah Ali Khamenei wrote in a decree read out by his chief of staff.

Mr Raisi replaces moderate president Hassan Rouhani, whose landmark achievement was the 2015 nuclear agreement between Iran and six major powers.

From the outset, Mr Raisi will have to tackle negotiations aimed at reviving the nuclear deal from which the US unilaterally withdrew imposing sweeping sanctions.

Mr Raisi, in his inauguration speech, said his government would seek to lift "oppressive" US sanctions, but would "not tie the nation's standard of living to the will of foreigners".

The 60-year-old also faces the United States, Britain and Israel's warnings to Iran over a deadly tanker attack last week for which Tehran denies responsibility.

Mr Raisi won a presidential election in June in which more than half the electorate stayed away after many political heavyweights were barred from standing.

A former judiciary chief, he has been criticised by the West for his human rights record.

Traffic limitations were in force on streets around the inauguration venue with domestic air travel to and from the capital banned for two hours, media reports said.

Today's ceremony marked Mr Raisi's formal accession to office. He will then be sworn in before parliament on Thursday when he is to submit his proposed government line-up.

His presidency will consolidate power in the hands of conservatives following their 2020 parliamentary election victory, marked by the disqualification of thousands of reformist or moderate candidates.

Last month, he called on parliament for "cooperation" to increase Iranians' hope in the future.

"I am very hopeful for the country's future and confident that it is possible to overcome difficulties and limitations," he said at the time.

The 2015 deal saw Iran accept curbs on its nuclear capabilities in return for an easing of sanctions.

But former US president Donald Trump withdrew from the accord three years later and ramped up sanctions again, prompting Tehran to pull back from most of its nuclear commitments.

Mr Trump's successor Joe Biden has signalled his readiness to return to the deal and engaged in indirect negotiations with Iran alongside formal talks with the accord's remaining parties -- Britain, China, France, Germany and Russia.

The US sanctions have choked Iran and its vital oil exports, and the economy contracted by more than 6% in both 2018 and 2019.

In his final cabinet meeting on Sunday, Mr Rouhani defended his track record but apologised over the "hardships" Iranians have had to endure.

After his election, Raisi made clear that his key foreign policy would be to improve ties with regional countries.

In mid-July, Mr Rouhani said he hoped his successor can clinch a deal to lift US sanctions and conclude nuclear talks.

But Ayatollah Ali Khamenei, whose word is final in policy matters, has warned against trusting the West.

Mr Raisi has already said he will not hold talks simply for the sake of negotiations.

His government will only support talks that "guarantee national interests", the incoming president said.

Six rounds of nuclear talks between Iran and world powers were held in Vienna between April and June.

The last round concluded on June 20, and no date has been set for a resumption.