Oman’s Strait of Hormuz Advantage in a Time of Regional Disruption

Oman’s hydrocarbon export infrastructure outside the Strait of Hormuz gives it a relative advantage among Gulf economies facing potential shipping disruptions. However, recent incidents affecting key ports highlight that while Oman may offer greater resilience for trade and logistics, it should be viewed as a lower-risk option rather than a fully insulated safe haven.

Oman is emerging as one of the more resilient Gulf economies amid disruptions affecting shipping and energy flows through the Strait of Hormuz. While most Gulf hydrocarbon exporters remain heavily dependent on the Strait for their energy exports, Oman benefits from key export infrastructure located outside the chokepoint. This geographic positioning provides the sultanate with a degree of operational flexibility compared with many regional peers.

Recent drone incidents affecting Duqm and Salalah, however, highlight that geographic diversification does not fully eliminate exposure to regional instability. For businesses and investors assessing Gulf supply-chain risks, Oman is therefore better viewed as a comparatively less exposed option rather than a fully insulated safe haven.

Why Oman is less exposed

Oman occupies a structurally distinct position among Gulf producers. Unlike Kuwait, Bahrain, Qatar, or Iraq, which depend on the Strait of Hormuz for the bulk of their hydrocarbon exports, Oman’s hydrocarbon export infrastructure is located outside the Strait. Crude exports are centered on Mina Al Fahal, while liquefied natural gas (LNG) exports ship from Qalhat near Sur.

Sohar and Duqm further strengthen Oman’s strategic position by expanding its port and energy infrastructure outside the chokepoint. Oman is the only Gulf sovereign with zero hydrocarbon export exposure through the Strait, although wider trade and shipping costs remain sensitive to regional disruptions.

Under a baseline scenario of a short-lived Strait disruption, Oman’s gross domestic product (GDP) is projected to increase modestly, by around 0.8 percent after four weeks of closure, as higher oil prices lift government revenue while export operations continue uninterrupted.

Other Gulf Cooperation Council (GCC) economies face GDP contractions of between 0.6 percent and 1.9 percent over the same period. This reflects a structural geographic advantage, though its benefits remain conditional on how the situation evolves. Oman avoids the disruption channel altogether, rather than relying on mitigation measures like Saudi Arabia’s East–West Pipeline or the United Arab Emirates’ (UAE) Fujairah Bypass.

That insulation has limits:

• On March 1, two drones struck Duqm port: one hit a workers’ housing unit, injuring one expatriate; debris from the second fell near fuel tanks.
• On March 3, a further incident hit a fuel storage tank at Duqm directly, though damage was contained with no casualties.
• On March 11, drones targeting fuel tanks at Salalah port forced a temporary operational suspension. These incidents highlight that geographic position alone does not remove operational risk.

What this means for trade and logistics

For logistics operators and supply chain planners, Oman’s configuration still offers meaningful advantages relative to other Gulf routing options. Omani ports could absorb some diverted cargo from Gulf routes under pressure, and Oman’s container terminals could function as alternative gateways for regional trade. Businesses with contingency routing plans that rely on Duqm or Sohar retain more flexibility than those locked into Hormuz-dependent corridors.

However, the cost environment has shifted across the board. War-risk insurance premiums have surged not just for Strait transits but across the wider Gulf and Sea of Oman. Coverage restrictions have expanded, and some shipowners are increasingly cautious about calling at ports across the region, including Omani ones. Freight and insurance costs are rising regardless of which routing option firms select.

Asia-Pacific buyers face disruption risk, though near-term pressure is more acute in South Asia than in Japan, South Korea, or China. South Asian buyers, especially India, Pakistan, and Bangladesh, face the sharpest near-term LNG stress because of heavier reliance on Qatari and UAE supply and lower storage buffers. India, which sources a significant share of its ammonia needs from the Gulf, faces compounding pressure on both imports and domestic production capacity. Pakistan is exposed to similar feedstock pressures, though the extent of production curtailments requires closer monitoring. Southeast Asian manufacturers dependent on Gulf petrochemicals may need to activate alternative sourcing strategies.

Where the business opportunity lies

Oman’s relative insulation makes it a more attractive logistics and investment anchor in the Gulf than most alternatives. Duqm and Sohar remain among the region’s more viable non-Hormuz logistics and industrial platforms. Demand for storage, re-export services, and port-linked logistics is likely to strengthen as regional disruption persists, and Oman has a credible basis to position itself as a resilient regional export platform for Asian buyers seeking supply continuity.

Investors may increasingly reassess Oman’s role within broader Gulf supply-chain networks. Geography is becoming a more important investment-screening factor in the region. Businesses reviewing supply-chain design should explicitly compare Oman’s exposure profile against higher-risk Gulf alternatives, factoring in insurance costs, port operational reliability, and realistic disruption scenarios. Oman’s medium-term credit stability looks relatively firm under baseline assumptions, supporting the case for sustained commercial engagement.

Risks businesses should still watch

Oman remains vulnerable to wider regional spillovers and market uncertainty. Prolonged disruption could tighten credit conditions and raise refinancing costs across the Gulf, and Oman would not be immune to those pressures even if its export operations continue. The incidents at Duqm and Salalah are a reminder that alternative ports can themselves face operational disruptions, and contingency plans built around Omani routes should account for that possibility.

The Salalah suspension had immediate commodity consequences beyond the port itself. The terminal had been serving as the Middle East’s last functioning ammonia export gateway after other regional terminals were disrupted. Its closure caused ammonia prices to spike sharply, while fertilizer prices also rose. Supply-chain assumptions must therefore be stress-tested against operational disruptions as well as commodity price shifts. Firms still require comprehensive insurance coverage, routing diversification, and inventory contingency plans regardless of which Gulf corridor they use.

Why this matters for investors

Oman’s geographic advantage is real, practically significant, and increasingly relevant to how Asian investors evaluate Gulf exposure. Under short-disruption baseline scenarios, Oman’s economy is projected to outperform other GCC peers. Resilient port access strengthens its medium-term commercial appeal, and businesses should explicitly compare Oman against higher-risk Gulf logistics hubs in their capital allocation frameworks.

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Asian private equity and sovereign wealth funds may want to reassess their Gulf port and logistics exposure in light of current disruptions. However, supply-chain diversification into Oman requires active due diligence, not passive rerouting assumptions. The incidents affecting Duqm and Salalah demonstrate that the risk perimeter extends beyond the Strait itself. A prudent investment approach is therefore to treat Oman as a relative safe harbor that still requires careful risk management.

Key takeaway

Oman’s advantage in the current Strait of Hormuz disruption is practical as much as geographic. Port infrastructure at Sohar and Duqm gives the sultanate more flexibility than many Gulf peers, and current assessments suggest it is structurally less exposed to prolonged disruption.

That relative advantage, however, is not without limits. Incidents affecting Duqm and the shutdown affecting ammonia exports through Salalah show that alternative routes can also face operational risks.

For Asia-based businesses, Oman is best viewed as a comparatively less exposed option rather than a fully insulated safe haven. Contingency planning should therefore account for a Gulf operating environment in which even ports outside the Strait remain vulnerable to broader disruption.

Businesses involved in Gulf trade and energy supply chains are facing growing uncertainty as disruptions in the Strait of Hormuz affect shipping routes, insurance costs, and contractual obligations. Our specialists advise companies on managing force majeure risks, reviewing commercial contracts, and strengthening supply chain contingency planning in the region. To arrange a consultation, contact dubai@dezshira.com.

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