OMM Newsroom
While the economies of several Gulf countries are expected to contract in 2026 amid the effects of the Iran war, Oman’s economy is forecast to grow by 4.1% this year, according to the International Monetary Fund.
AnewZ reports that Oman, which shares a maritime border with Iran and has faced attacks since the U.S.-Iran confrontation began, is among the few countries in the region to have maintained economic growth. Maya Senussi, chief economist for the Middle East at forecasting firm Oxford Economics, attributed the growth to higher energy production and exports.
Senussi said increased output in the energy sector, rising export volumes and improved regional connectivity had supported Oman’s economy. Gross domestic product (GDP) grew 5.2% year on year in the second quarter of 2026, its highest rate since 2022. The increase was driven mainly by a 14.7% rise in activity in the oil sector.
Oman has faced fewer security risks
Senussi said Oman had benefited from being relatively less exposed to the security risks of the ongoing U.S.-Iran conflict and from continued domestic investment. In her view, the risks the conflict poses to Oman’s economy appear limited, while domestic investment activity remains strong.
Several attacks on Omani ports were reported in March, but Tehran denied involvement. Oman has not, however, faced attacks on the scale experienced by Gulf neighbors such as the United Arab Emirates and Qatar.
Unlike the UAE and Qatar, Oman has no U.S. military bases or permanently stationed U.S. troops. Since the war began, many Iranian attacks targeting neighboring countries have struck U.S. military bases or infrastructure directly or indirectly linked to American military operations.
Throughout the conflict, Oman has maintained its role as a neutral mediator: it has criticized U.S. and Israeli attacks on Iran while also condemning Iranian strikes on other countries in the region. In March, Ebrahim Zolfaghari, a spokesperson for Iran’s senior military command, called Oman a “brotherly and friendly country” and said Iran respected its national sovereignty.
Strait of Hormuz restrictions boost ports’ importance
Restrictions on shipping through the Strait of Hormuz following Iranian attacks, along with the ongoing U.S. naval blockade of Iranian ports, have increased the strategic importance of Omani ports. Southern ports located farther from Iran and the strait are better positioned to benefit.
In October, Oman signed 28 investment agreements worth more than $790 million for commercial and industrial projects in special economic zones. Three of the projects are linked to the ports of Duqm, Sohar and Salalah.
According to Bloomberg News, French logistics company CMA CGM signed a $400 million agreement in June to develop and operate a terminal at Sohar port.
Growth has not been even across all sectors. Senussi said growth outside the energy sector slowed to 0.7% in the second quarter of 2026, its weakest rate in three years. The decline was driven by contractions in construction and hospitality-related industries.
The foundations of Oman’s economic resilience were laid well before the Iran war. When the budget deficit exceeded $11 billion in 2015, the government began broad austerity measures, cutting subsidies and public spending.
Reforms accelerated after Sultan Haitham bin Tariq ascended to the throne in 2020. Oman introduced value-added tax and took steps to reduce its reliance on hydrocarbons and attract foreign investment.
Non-oil revenues now account for more than 30% of GDP, while exports of logistics and manufactured goods have expanded. Economic diversification is also reflected in major investments in tourism. The Trump International Oman hotel and golf complex in Muscat, scheduled to open in December 2028, will cost $500 million, alongside other projects worth hundreds of millions of dollars.
Oman is the only Gulf Cooperation Council economy forecast to avoid recession this year. However, Senussi said the country’s growth advantage over Saudi Arabia and the UAE would not last.
According to her forecast, Oman’s economic growth will slow to 2.1% next year as activity in the energy sector normalizes. At the same time, sectors under pressure this year are expected to recover gradually. Senussi said growth outside the energy sector would more than double in 2027, reaching 3.4%.
Oman’s future economic growth also depends on factors beyond its control. Preserving the gains made during the war may depend on decisions taken not only in Muscat, but also in Washington and Tehran.
