Oman has gained from Iran war but risks persist, says IMF

• Hormuz closure boosts surpluses
• Oman was largely spared Iranian attacks
• Inflation rises on war costs

Oman’s access to major ports outside the Strait of Hormuz and its discreet economic management have shielded it from the worst effects of the Iran conflict, but continued regional uncertainty still poses significant risks, the International Monetary Fund (IMF) said.

The US-Israeli war with Iran and the resulting closure of the waterway have curtailed Gulf oil exports and production, pushing up crude prices and generating notable fiscal and external surpluses for Oman, where authorities have maintained prudent budget policies, according to a press release yesterday.

“Oman’s economy continues to demonstrate resilience in the face of headwinds from the war in the Middle East, with adverse impacts being thus far limited to inflationary pressures and select non-hydrocarbon sectors,” said Abdullah AlHassan, mission chief for Oman, after leading a staff visit to Muscat last week.

The IMF expects the country’s fiscal surplus to reach 4.5 percent of GDP this year, while the current account is forecast to shift from what was almost a 2 percent deficit in 2025 to a 3 percent surplus this year and next.

Inflation, however, rose from 1 percent in 2025 to 2.8 percent from January to May, driven by higher food and transportation costs linked to the war.

Iranian attacks since hostilities began on February 28 damaged energy production facilities across most GCC members but largely spared Oman, allowing it to boost oil output and sales.

Against this backdrop, the IMF forecasts Omani GDP growth of about 3.7 percent this year and 3 percent in 2027, up from 2.4 percent last year and 1.6 percent in 2024.

Growth in non-hydrocarbon sectors has slowed down because of the conflict, but is expected to pick up again next year if a broader recovery follows a peaceful resolution to the regional clashes.

Further reading:

• Shipping industry urges caution on Hormuz reopening
• Iran peace deal not a ‘reset button’ for Gulf, warn analysts
• Markets cheer Iran deal but the Gulf remains cautious

US and Iranian officials have reached a tentative deal to a ceasefire across the region. The draft memorandum of understanding also includes plans to resume shipping through Hormuz and provide Iran with some economic relief, but the details and timeline for implementation remain murky.

“Given the elevated uncertainty from the war, risks to the near-term outlook are tilted to the downside,” AlHassan said.

“Sustaining momentum in implementing policy reforms will be key to accelerating economic transformation, while entrenching fiscal and external sustainability,” he added.

He cited improving tax management, bolstering the financial sector and increasing women’s participation in the workforce among a half-dozen top priorities.