Poorer Oman may align more closely with Saudi Arabia

Significance

The sultan this month paid his first foreign visit to Saudi Arabia, establishing institutions for ongoing cooperation. Under the previous ruler, Muscat was wary of Riyadh’s dominant influence in the Gulf Cooperation Council (GCC). However, both the regional environment and Oman’s economic situation are now in a state of flux.

Impacts

• New Saudi investment in Oman would likely focus on the tourism and industrial sectors.
• Higher oil prices will provide only a temporary reprieve for Muscat’s structural economic problems.
• Omani interactions with the United Arab Emirates could become more fraught.