Oman Seeks Lasting Gains From Iran War With Ports, Finance and AI Push

Oman is seeking investors for its ports, a new financial center, and artificial intelligence infrastructure as it tries to turn economic gains from the Iran war into durable growth.

The sultanate’s ports outside the Strait of Hormuz and its relative insulation from attacks have helped it benefit from disrupted regional trade.

The IMF forecasts real economic growth of 4.1% this year, while the other five Gulf Cooperation Council economies are expected to contract, according to Bloomberg.

Its benchmark stock index has risen about 24% this year, while major Saudi and Emirati indexes have declined.

Sustaining that advantage will depend partly on whether businesses retain operations in Oman once the conflict ends.

Port Investment Takes Priority

Transport Minister Saeed bin Hamoud Al Maawali said Oman was discussing sales of stakes in major terminals with international companies and Gulf investors.

France’s CMA CGM and Oman’s Asyad signed a $400 million agreement in June to build and operate a logistics terminal at Sohar Port.

Officials are also promoting Duqm and Salalah as part of a wider effort to expand the country’s trading role.

Al Maawali said some companies operating in the Gulf had already chosen Oman as a base for export capacity serving India and Africa.

“So that will bring some long-term benefit,” he said.

However, geography also imposes constraints.

Steffen Hertog, a professor at the London School of Economics and Political Science, said southern Omani ports could serve longer shipping routes linking Asia, Africa and Europe.

“But they are not connected to the rest of the GCC and will struggle to become global hubs given the scale this would require.”

Finance and AI Ambitions

Muscat plans to start registering companies at its proposed international financial center later this year, with full operations scheduled for 2027. Few details have been disclosed.

Oman is also preparing to sign an agreement with Britain’s Yamna for a large AI data center in Salalah. The initial phase is expected to cost more than £1 billion, or $1.3 billion.

Attacks exposing the vulnerability of data facilities elsewhere in the Gulf could strengthen Oman’s appeal.

It nevertheless remains well behind Saudi Arabia and the United Arab Emirates in data center capacity and agreements with global AI companies.

Its ability to attract workers faces another test: plans announced last year to introduce personal income tax, a first among Gulf states.

Tax-free earnings remain a major incentive for foreign employees in neighboring countries.

Economic Recovery Meets Wartime Risk

The investment drive follows a fiscal recovery. Higher oil prices, reforms and privatizations helped Oman reduce debt and regain investment-grade ratings after all three major rating agencies had assigned it junk status.

OQ Exploration & Production's 2024 flotation raised a record $2 billion. Oman’s stock exchange is now on FTSE Russell’s watch list for a possible promotion to emerging-market status.

Yet its protection from the conflict has been incomplete. Drones struck fuel tanks at Salalah’s port in March.

Talks with Tehran over managing Hormuz have also drawn criticism from U.S. President Donald Trump.

Goldman Sachs economist Farouk Soussa expects Oman to outperform its Gulf peers as long as the conflict, shipping disruption, and escalation risks persist.

He cautioned that developing the non-oil economy would take time and that its relative advantage could fade after the war.