Escalation Scenarios
The Gulf region faces multiple potential escalation paths: US-Iran military confrontation over the nuclear programme or proxy conflicts; expansion of the Yemen war into broader regional conflict; Houthi attacks triggering military responses that destabilise shipping lanes; Iranian retaliation against Gulf states following Israeli strikes; or intra-GCC tensions escalating beyond diplomatic friction. While none of these scenarios is probable in any given year, the cumulative probability over a decade is significant, and any would profoundly impact Oman.
Oman’s Vulnerability
Oman’s geographic position makes it uniquely vulnerable to regional conflict. The Sultanate sits at the mouth of the Strait of Hormuz, borders Yemen (an active conflict zone), faces Iran across a narrow strait, and depends on maritime trade routes for both exports and imports. Unlike the UAE or Saudi Arabia, Oman lacks the military scale to defend against major state threats, relying instead on deterrence through alliance relationships, neutrality, and geographic positioning. Any conflict that closes or restricts the Strait of Hormuz would be economically devastating.
Economic Impact Modelling
A major regional conflict could impact Oman through multiple channels: disruption of oil and gas exports (70+ percent of government revenue), import supply chain breakdown (Oman imports most consumer goods and much of its food), infrastructure damage from missile or drone attacks, capital flight and investment freeze, shipping insurance premium spikes affecting all trade, and the fiscal cost of military mobilisation. Even a short conflict could set economic development back by years.
Mitigation Strategies
Oman’s primary conflict mitigation strategy is diplomatic: maintaining relationships with all parties to reduce the probability of conflict and ensuring Oman is not targeted if conflict occurs. Secondary strategies include infrastructure diversification (Duqm as an alternative to Hormuz-dependent facilities), strategic reserves of food, fuel, and essential supplies, civil defence preparedness, and military interoperability with allied forces. The mediation tradition is not merely diplomatic virtue – it is existential insurance.