In the midst of the ongoing turmoil around Iran’s activities in the Strait of Hormuz, Oman, which lies on the opposite side of this contentious waterway, has not received as much attention.
Oman has been something of a puzzle during the Iran situation. While it has cooperated with the U.S. as a mediator, it has also displayed leniency toward Iran’s plan to impose tolls on vessels navigating the strait.
This could be a serious misstep. In contrast to Iran, Oman has a bright future; its recent economic reforms show promise, and it has the chance to join regional efforts against the Islamic Republic. For Omanis, Muscat should choose a path that leads to more freedom, opportunities, and economic growth.
Despite Oman’s geographical position straddling the strait, it’s worth considering why strengthening ties with Iran might not be the best move. In the recent Heritage Foundation report on economic freedom, Oman notably improved its score — the second-highest increase globally — climbing 19 places to rank 39th.
This progress is a testament to Oman’s growing economic strength under its Vision 2040 initiative. With better fiscal management, debt has been reduced to under 40% of GDP, and efforts to combat corruption have greatly enhanced transparency and accountability.
Opening the door for more foreign investment has played a crucial role in this success. Consequently, the International Monetary Fund estimates Oman’s GDP per capita at approximately $21,645, marking a 19% increase from 2025.
This situation starkly contrasts with the economic struggles in Iran. Despite its vast oil and gas reserves, the Iranian regime’s mismanagement has taken a toll on the economy for years. Following the 2015 nuclear deal, inflation was around 7%, but now it’s about 50%, and food prices are soaring near 100%. Unemployment, officially at about 10%, may be as high as 25% per independent estimates. Many young people are suffering, resulting in a GDP per capita of around $3,415, which is less than half of Oman’s figure and a decline from the previous year.
These economic realities make Oman’s recent cautious stance towards Iran puzzling. High-level talks have occurred in Muscat, during which both countries reaffirmed rights over the waterways and the potential for tolls. While official communications use diplomatic terms like “security” and “environmental costs,” the underlying message seems to convey a state-supported threat to energy passage from the Gulf.
For Iran, adopting such a money-making approach is perhaps understandable given its dire situation, but it falls short of what Oman aspires to achieve. Rather than aligning with a global outcast and risking sanctions or military repercussions from the U.S., Muscat should focus on maintaining its economic growth and future potential.
A sensible next step would be to embrace economic freedom fully and facilitate transit on its side of the strait, regardless of Iranian pressures. This would make the Omani port far more appealing to international vessels, including those from the U.S. Navy. Oman could also play a vital role in regional efforts to create alternative infrastructure around the strait, ultimately isolating Iran further.
Working with Iran to impose restrictions or tolls could severely compromise Oman’s opportunities, potentially leading to its isolation alongside Iran. Instead, options, like Bahrain’s recent cooperation within the Gulf Cooperation Council, present better paths for Oman.
Instead of becoming a subordinate partner to Tehran, Muscat holds a distinct economic opportunity to team up with a far more prosperous regional ally, collaborating with the U.S. for mutual benefit. Now is the time for Oman to take decisive actions and continue on its transformative journey.
