Oman could become a cornerstone of Gulf energy security, but risks remain

Oman, once a maritime empire spanning from Mozambique to Gwadar in Pakistan, now occupies a crucial position overlooking the Strait of Hormuz. The country has experienced economic growth despite regional conflict, with a projected 4.1% expansion. Oman's debt has decreased significantly, and it benefits from high oil and gas exports, as well as heavy industries in refined petroleum, fertilisers, and aluminium.

Construction of the Hafeet Rail, linking industrial Sohar to Al Ain and Abu Dhabi, began in May 2024, with completion expected by late 2027. A direct connection to the GCC electricity grid is also planned for late next year, benefiting the renewable sector. However, Oman has faced drone attacks on its oil terminals and ships, but suffered less damage than its Gulf neighbors.

In 2016, Oman announced plans for a 200-million-barrel petroleum storage terminal at Duqm to reorient exports away from Iran and potentially attract other GCC nations. Saudi Aramco is now studying a pipeline to Duqm, estimated at $7 billion, bypassing Hormuz and the Bab Al Mandeb strait. Oman's strategic centrality carries risks, including potential attacks and the possibility that peace may render much of the infrastructure unnecessary.

Additionally, the projects may compete with existing Gulf terminals, and strained Gulf relations due to Muscat's proximity to Tehran during mediation.