Tehran and Muscat could deepen economic ties

Significance

Oman has historically maintained strong business and diplomatic links with Iran, cutting across the anti-Iranian political agenda pressed by Saudi Arabia on the other Gulf Cooperation Council (GCC) countries. Economic relations are now more important for Muscat than Tehran, while the political ties are most useful for Iranian foreign policy. However, Oman in January 2017 joined the Saudi-led Islamic Military Alliance to Fight Terrorism, comprising 40 countries excluding Iran and Iraq.

Impacts

• Oman’s urgent need for economic diversification will broaden its search for economic partners.
• If the Iran-Saudi Arabia regional confrontation worsens, Oman’s midway stance could be tilted by financial benefits from either side.
• In case of a serious Washington-Tehran showdown, Muscat would maintain quiet links with Iran, but ultimately prioritise US relations.