Historical Context
Oman’s relationship with Iran is arguably the most strategically significant and diplomatically delicate bilateral relationship in the Gulf. The two nations share control of the Strait of Hormuz, through which approximately 20-25 percent of global oil trade passes. Unlike other GCC states, Oman has maintained consistently cordial relations with Iran through decades of regional turmoil – including the Iran-Iraq War, the 2011 Arab Spring, and periods of intense Saudi-Iranian rivalry. Sultan Qaboos cultivated a personal relationship with Iranian leadership that served as a critical diplomatic channel.
Economic Partnership
Economic ties include a gas pipeline agreement (though implementation has faced delays), trade in food products and commodities, and fisheries cooperation in shared waters. Total bilateral trade is modest, estimated at USD 1-2 billion, constrained by international sanctions on Iran and Iran’s own economic challenges. A proposed undersea natural gas pipeline from Iran to Oman has been discussed for over a decade and would, if built, diversify Oman’s gas supply at a critical time when domestic production faces pressure. Free zone trade and barter arrangements have provided some sanctions workarounds.
Strategic Dimensions
Oman’s Iran relationship serves a function that transcends bilateral interests – it provides a diplomatic bridge between Tehran and the GCC, between Iran and the West, and between Shia and Sunni power structures. Oman facilitated the secret US-Iran talks in 2012-2013 that led to the JCPOA nuclear agreement. The Sultanate has mediated prisoner exchanges, hostage releases, and crisis de-escalation at multiple points. This role requires maintaining genuine trust with Tehran, which sometimes creates tension with GCC partners, particularly Saudi Arabia.
Future Outlook
Under Sultan Haitham, Oman’s Iran policy has maintained continuity – the mediation role and Strait of Hormuz cooperation remain foundational. The Iran gas pipeline, if realised, would deepen economic interdependence but also create strategic vulnerability. Iran’s internal dynamics (economic pressure, leadership transitions, nuclear programme trajectory) create uncertainty. Oman’s value as a bridge depends on maintaining credibility with all parties, which becomes more difficult as regional polarisation intensifies. The relationship is Oman’s most distinctive geopolitical asset.