In the maelstrom of noise over Iranian action in the Strait of Hormuz, there has been much less discussion of the country on the other side of the contested waterway: Oman.
Over the course of the conflict in Iran, Oman has been a somewhat enigmatic actor. While cooperating with the United States as a mediator, it has also displayed an openness to Tehran’s schemes to impose tolls on shipping through the Strait.
That would be a significant mistake. Unlike Iran, Oman has a bright, promising future due to recent effective economic reforms and the opportunity to join the growing regional cohesion against the Islamic Republic. For the sake of the Omani people, Muscat should embrace this path to greater freedom, opportunity, and prosperity.
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Despite the accident of geography that put them on either side of the Strait, there are plenty of reasons a rapprochement with Iran makes no sense for Oman. In the 2026 edition of The Heritage Foundation’s Index of Economic Freedom, an annual benchmark report that compares entrepreneurial competitiveness and resilience environments of countries around the globe, Oman made a splash by achieving the second-best score improvement (behind Javier Milei’s Argentina) and moving up by impressive 19 places to rank 39th globally.
This transformative advancement reflects the country’s ongoing economic expansion and strength under the Oman Vision 2040 framework. Fiscal consolidation and more effective management of public finance have helped reduce the debt level to less than 40 percent of GDP. Legal reforms focused on ensuring greater transparency and accountability have impressively combated corruption.
In addition, opening up Omani businesses to greater foreign investment has also contributed to the country’s success. As a result, the International Monetary Fund estimates Oman’s GDP per capita at $21,645 — a nineteen percent increase over 2025.
This happy state of affairs could not be further from the disastrous economic dysfunction playing out in Iran. Despite having the world’s second-largest proven oil reserves (to say nothing of significant natural gas reserves), due to systemic mismanagement by the regime, Iran’s economy was in a compounding free fall long before Operation Epic Fury. Things are now far worse.
Ten years ago, after Barak Obama’s JCPOA gave Tehran an economic lifeline, inflation was around 7%. It is now around 50%, with prices for food closer to 100%. Poverty levels have risen dramatically, with millions more projected to fall into poverty in coming months. Official estimates put unemployment at about 10%, but independent assessments put it over 25%, with young people bearing the brunt of the job losses. As a result, Iran’s GDP per capita is a dismal $3,415 — less than half of Oman’s and a six percent decrease from 2025.
All of which makes Oman’s recent equivocation over Iran confounding. The two countries recently had high-level discussions in Muscat to assert their joint sovereignty over the waterway, and so ability to demand payment for ships to pass. While dressed up in diplomatic language in official statements as security and environmental fees, the reality is a state-sponsored blackmail imposed on the vital energy floes from the Gulf.
Such money-grubbing schemes, while understandable for an increasingly impoverished and desperate Iran, are beneath the aspirations of Oman. Instead of teaming up with a global pariah and running the risk of U.S. economic sanctions or even military attack, Muscat should build on the hard work it has already done to transform its economy for greater future.
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The next pragmatic step should be to further embrace the principle of economic freedom to offer passage through their side of the Strait independent of Iranian threats, which would only increase the attractiveness of their ports as ports of call for everything from international tankers from Gulf nations to U.S. Navy vessels. Oman could also be an integral part of the regional race to establish an alternative infrastructure around the Strait, which will eventually — and inevitably — leave Iran out in the cold.
Going into business with Iran to impose restrictions and tolls on Hormuz would fatally undermine this opportunity for Oman, which could wind up isolated from the rest of the region along with Iran. The recent show of unity in the Gulf Cooperation Committee (GCC) in Bahrain with Secretary of State Marco Rubio offers a much better alternative for Oman.
Rather than becoming a junior partner to Tehran, Muscat has the unique geoeconomic opportunity to coordinate with far more productive and prosperous regional partners in conjunction with the United States for the greater good. Now is the time for Oman to seize that moment to ensure its transformative trajectory.
