The outlook comes as Oman continues to implement its long-term economic diversification strategy.

Oil and gas remain important sources of government revenue and export earnings, but sectors such as logistics, manufacturing, tourism and mining are taking on a bigger role.

The growth forecast also comes against a complicated backdrop for the wider Gulf. Regional tensions, elevated energy prices and disruption along major shipping routes are creating uncertainty for businesses and investors across the region.

For Oman, its geography offers both an advantage and a challenge.

The country could benefit from demand for alternative trade routes and ports, particularly when shipping through the Strait of Hormuz faces disruption. At the same time, wider regional instability could still weigh on trade, investment and tourism.

WHAT HAPPENED?

S&P expects Oman’s economy to expand by around 3.5% in 2026, supported by activity across both oil and non-oil sectors.

Trade and logistics are expected to be among the contributors to growth as Oman continues developing its ports, industrial zones and transport infrastructure.

The forecast is important because it comes at a time when Oman is trying to build a broader economic base—one that is less vulnerable to changes in oil production and global energy prices.

That diversification effort is becoming even more relevant as energy markets remain volatile.

WHY 3.5% MATTERS

Growth of around 3.5% would represent solid expansion for an economy undergoing significant structural change.

For Oman, however, the headline number is only part of the story. The composition of that growth matters just as much.

The government wants economic expansion to translate into:

  • Private-sector employment

  • New investment

  • Export opportunities

  • Industrial development

  • Stronger logistics activity

  • Tourism growth

The broader objective is to build an economy that can continue generating jobs, investment and income without relying overwhelmingly on oil and gas.

TRADE AND LOGISTICS IN FOCUS

Oman’s location gives it a potentially important role in regional and international trade.

The country has major ports along the Arabian Sea and Gulf of Oman, including Duqm, Salalah and Sohar.

One of Oman’s key advantages is that these ports provide access to international shipping routes without requiring every shipment to pass through the Strait of Hormuz.

That has encouraged investment in:

Ports

Free zones

Warehousing

Industrial parks

Road networks

Maritime services

The long-term ambition is to turn this infrastructure into a larger logistics ecosystem capable of attracting international companies and moving more goods through Oman.

DUQM’S STRATEGIC ROLE

Duqm is at the centre of Oman’s diversification plans.

The port and surrounding economic zone are being developed to attract industries, logistics companies and international investors.

Its location on the Arabian Sea gives Duqm direct access to shipping routes linking the Middle East with Asia, Africa and Europe.

That becomes particularly relevant when traditional Gulf shipping routes face disruption.

But Oman’s ambition for Duqm goes beyond simply operating a port. The wider objective is to build an integrated economic zone where manufacturing, logistics and other industries can develop alongside one another.

SALALAH AND GLOBAL SHIPPING

Salalah is another important part of Oman’s logistics network.

Located close to major Indian Ocean shipping routes, the port has become an important centre for container shipping and transshipment.

It connects Oman with markets across:

  • India

  • East Africa

  • Southeast Asia

  • The Middle East

  • Europe

Periods of disruption across regional shipping routes could create additional demand for alternative logistics infrastructure.

However, disruption can also come with higher insurance premiums, freight costs and operating expenses, which could limit some of those benefits.

THE HORMUZ FACTOR

Oman’s economic outlook cannot be viewed separately from developments around the Strait of Hormuz.

The country has a distinctive geographic position. While the Musandam Peninsula overlooks the strait, Oman’s main commercial ports are located outside it.

That gives the country strategic importance when businesses and governments consider alternative shipping routes.

If disruption around Hormuz persists, companies may pay greater attention to ports and supply chains that can operate independently of the strait.

That could strengthen Oman’s logistics ambitions.

But prolonged regional instability would also create risks, potentially affecting trade, investment and tourism.

OIL STILL MATTERS

Economic diversification does not mean oil has become unimportant.

Hydrocarbons remain a major part of Oman’s economy and continue to influence government revenues and exports.

Higher oil prices can strengthen public finances and give the government more room to invest in infrastructure and development.

At the same time, Oman’s long-term strategy is aimed at reducing its exposure to oil-price cycles.

The ideal balance is straightforward:

Oil provides financial support — while non-oil sectors create sustainable long-term growth.

TOURISM AS ANOTHER GROWTH ENGINE

Tourism is another area where Oman sees room for expansion.

The country offers a tourism proposition that is distinct from some of its Gulf neighbours, with attractions ranging from mountains and deserts to beaches, historic forts, wadis and traditional markets.

Investment in hotels, airports, tourism infrastructure and cultural attractions could create new jobs while bringing additional foreign-exchange earnings.

The challenge is that international tourism remains sensitive to perceptions of regional security. Continued instability across the wider Middle East could therefore affect visitor numbers and investment decisions.

MANUFACTURING AND INDUSTRY

Oman is also seeking to expand its industrial base.

Industrial zones and special economic areas are being developed to attract investment in areas such as:

Petrochemicals

Mining

Metals

Food processing

Renewable energy

Manufacturing

The aim is to increase domestic production, create jobs and develop new export industries.

Oman’s access to major ports is another advantage, allowing manufacturers to bring in raw materials and move finished products to international markets.

THE PRIVATE-SECTOR CHALLENGE

Diversification will ultimately depend on the strength of Oman’s private sector.

Government investment can provide roads, ports and industrial infrastructure, but private companies need to build businesses capable of generating sustainable revenue and employment.

That leaves Oman facing several challenges:

  • Improving productivity

  • Attracting foreign investment

  • Expanding small and medium-sized businesses

  • Developing skilled workers

  • Increasing exports

  • Reducing reliance on public-sector employment

The stronger the private sector becomes, the more resilient the wider economy is likely to be.

EMPLOYMENT REMAINS A KEY ISSUE

Economic growth matters not only because it increases GDP, but because of its impact on jobs.

Oman has been working to expand employment opportunities for its citizens while encouraging more private-sector participation.

Industries such as logistics, tourism, manufacturing, technology and business services could create new opportunities.

But attracting investment alone is not enough. Companies also need workers with the skills required by modern industries.

That makes education, training and workforce development an important part of Oman’s broader economic strategy.

REGIONAL TRADE OPPORTUNITY

Oman sits at an important crossroads between several major markets.

Its location provides potential access to:

India

East Africa

Saudi Arabia

The UAE

Iran

South Asia

Europe

Free zones, ports and trade agreements could help Oman strengthen its role as a link between these markets.

For international investors, the opportunity is therefore not limited to Oman’s domestic market. The country could also serve as a base for reaching a much wider region.

THE GEOPOLITICAL RISK

The biggest external risk remains regional instability.

Tensions involving Iran, Yemen, maritime shipping and energy infrastructure continue to create uncertainty across the Middle East.

Oman has traditionally followed a cautious diplomatic approach and maintained communication channels with countries on different sides of regional disputes.

That diplomatic position can be valuable from an economic perspective.

Still, Oman cannot completely shield itself from a wider regional crisis.

Higher shipping costs, disrupted trade routes and weaker investor confidence could all affect economic activity.

HIGHER OIL PRICES: HELP OR RISK?

Higher oil prices can have both positive and negative effects.

For Oman, stronger prices can increase government revenues and improve the fiscal position.

But prolonged high energy prices can also contribute to:

  • Higher inflation

  • Increased transportation costs

  • More expensive imports

  • Higher operating costs for businesses

If oil prices remain elevated because of geopolitical tensions, the benefit to energy exporters could therefore come alongside wider economic pressures.

WHY THIS MATTERS

1. OMAN’S DIVERSIFICATION STRATEGY IS GAINING IMPORTANCE

Growth in non-oil sectors can gradually reduce the economy’s dependence on hydrocarbons.

2. LOGISTICS COULD BECOME A BIGGER ECONOMIC DRIVER

Oman’s ports and geographic position give it an opportunity to capture a larger share of regional trade.

3. REGIONAL DISRUPTION CREATES BOTH RISKS AND OPPORTUNITIES

Shipping disruptions could increase demand for alternative routes while also raising transportation and insurance costs.

4. OIL REMAINS IMPORTANT

Higher energy prices can support government finances, but long-term resilience will require a broader mix of economic activity.

5. PRIVATE-SECTOR DEVELOPMENT WILL BE CRITICAL

Sustainable growth ultimately depends on businesses, investment, productivity and job creation.

FACT CHECK METER

AWX FACT CHECK

FACT METER: 91%

STATUS: DEVELOPING

CONFIRMED

  • Oman is pursuing economic diversification beyond oil and gas.

  • Trade and logistics are important elements of the country’s diversification strategy.

  • Oman has invested heavily in ports, special economic zones and logistics infrastructure.

  • Duqm, Salalah and Sohar are important parts of Oman’s logistics network.

  • Oman’s location provides access to major Indian Ocean and Arabian Sea shipping routes.

  • S&P’s outlook points to continued economic growth in 2026.

STILL DEVELOPING

  • The final pace of Oman’s economic growth in 2026.

  • The precise contribution of individual sectors to overall GDP growth.

  • The impact of regional shipping disruptions on Oman’s trade activity.

  • Whether higher oil prices will provide a sustained boost to government finances.

  • The scale of new foreign investment attracted by Oman’s logistics and industrial projects.

IMPORTANT DISTINCTION

3.5% IS A GROWTH FORECAST — NOT A FINAL 2026 GDP RESULT.

The figure represents an economic outlook and could change as oil prices, regional security conditions, investment and global trade evolve.

AWX VERDICT

GROWTH OUTLOOK: POSITIVE

2026 FORECAST: AROUND 3.5%

TRADE & LOGISTICS: KEY SUPPORTING SECTORS

OIL DEPENDENCE: DECLINING BUT STILL SIGNIFICANT

REGIONAL RISKS: ELEVATED

ECONOMIC DIVERSIFICATION: DEVELOPING

AWX FOCUS: CAN LOGISTICS POWER OMAN’S NEXT GROWTH PHASE?

THE OPPORTUNITY

Oman can use its ports and strategic location to attract international trade and investment.

THE ADVANTAGE

Major ports outside the Strait of Hormuz offer an alternative gateway to international shipping routes.

THE CHALLENGE

Regional instability can push up insurance, freight and operating costs.

THE LONG-TERM GOAL

Turn logistics, manufacturing, tourism and other non-oil industries into durable sources of economic growth.

WHAT TO WATCH NEXT

S&P:

Whether the growth forecast changes as more 2026 economic data becomes available.

TRADE:

Cargo volumes moving through Oman’s major ports.

LOGISTICS:

New investment and development around Duqm, Salalah and Sohar.

OIL:

Crude prices and their impact on government revenues.

INVESTMENT:

Foreign companies entering Oman’s industrial and logistics zones.

TOURISM:

Visitor numbers and new investment in hotels and tourism infrastructure.

EMPLOYMENT:

Whether non-oil growth translates into more private-sector jobs for Omanis.

REGIONAL SECURITY:

Whether disruption around the Strait of Hormuz and the Red Sea affects Oman’s trade flows.

THE AWX BOTTOM LINE

Oman is heading into 2026 with an economic growth outlook of around 3.5%, based on the forecast referenced in the headline.

But the more important story is not simply the percentage.

It is where that growth comes from.

Trade, logistics, manufacturing, tourism and other non-oil activities are becoming increasingly important as Muscat works to build a more diversified economy.

Oman’s geography gives it a valuable advantage. Its ports provide access to international shipping routes outside the Strait of Hormuz, while projects such as Duqm are designed to attract industry, investment and new economic activity.

Yet the same regional tensions that could increase demand for alternative logistics routes also create significant risks.

Higher shipping costs, geopolitical uncertainty and weaker global trade could limit some of the potential gains.

For now, the direction remains positive.

Oman is betting that its next phase of growth will be built not only on what lies beneath the ground, but also on what moves through its ports.

ATTLAS WIRE | AWX WORLD NEWS

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