Energy and Diplomacy: How Oman is Adapting to a Multipolar World
Jonathan Fenton-Harvey is an analyst and journalist, particularly focused on geopolitical and economic issues in the Gulf region, Middle East and North Africa
Oman often flies under the radar as an understated actor in the Middle East, especially compared to its fellow Gulf Cooperation Council (GCC) neighbours such as Saudi Arabia, the United Arab Emirates and Qatar, which have traditionally wielded greater influence over the region’s political landscape.
This perception stems from several facets of Oman as a nation-state. It is the only one of the six GCC states to have no skyscrapers, with urban planning focused on preserving its natural cultural heritage. It has also avoided the glitzy allure of Dubai, the sports-centric investments of Saudi Arabia, or Qatar’s establishment of influential media platforms like Al Jazeera.
Uniquely, Oman is the only Ibadi-majority state, a branch of Islam distinct from both Sunni and Shia traditions. Some analysts and scholars have suggested that this identity has contributed to the country’s reconciliatory approach of supporting dialogue over regional disputes.
Muscat’s key foreign policy asset, however, is its steadfast neutrality, enabling Oman to punch above its weight diplomatically and maintain strong relationships with both regional and global powers.
Like other Middle Eastern nations, Oman is navigating a rapidly changing world. Rising tensions between regional actors like Israel and Iran, alongside the intensifying great power competition between China, Russia, and the United States, have certainly reshaped the region.
Meanwhile, the looming challenge of climate change and the global transition towards a post-hydrocarbon era have pushed Oman, like its oil-rich GCC peers, to diversify its economy and invest in renewable energy as part of a broader shift towards sustainability.
A tradition of neutrality
Neutrality has been a cornerstone of Oman’s foreign policy since 1970 when Sultan Qaboos bin Said assumed power, a legacy that has been upheld by his successor, Haitham bin Tariq Al Said, who took the reins after Qaboos’ death in 2020.
Throughout this century, Oman has consistently maintained neutrality in various conflicts. This has become particularly noticeable in Syria with Oman calling for “self-restraint” among the country’s different factions, emphasising “national reconciliation” and stability as the ultimate goal. A position that differs from that of other regional players whose responses to the fall of Assad have been governed by national self-interest.
Beyond Syria, Oman has played a pivotal diplomatic role in Yemen’s ongoing war remaining the United States’ go-to partner in facilitating talks between the Houthis, Yemen’s internationally recognised government and representatives of the Saudi-led coalition.
A key element of Oman’s success lies in its approach: rather than aiming to advocate a specific solution, it simply focuses on providing space for dialogue among opposing actors. That commitment to fostering harmony among regional neighbours has been a hallmark of its foreign policy.
Oman has also served as a crucial backchannel for talks between the United States and Iran, particularly during periods of heightened tension. This role became critical after Washington’s withdrawal from the nuclear deal in 2018 under the Trump administration’s first term. Under President Biden, Oman continued to mediate during flare-ups between Israel and Iran, cementing its reputation as an indispensable intermediary.
Following tensions between Israel and Iran in 2024 and fears of a wider regional conflict, Oman still managed to balance its ties with Iran, strengthening economic and trade relations and joining naval drills with Russia and Iran while also collaborating with the US.
Diversification of economic partnerships
Along with its neutrality, Muscat’s stability and vital geostrategic location have made it an increasingly attractive partner for international investment. Historically speaking, this was evident to European powers, from Portugal seeing it as an important outpost for its spice trade in the 16th century, to the United Kingdom building an alliance with Oman to protect its trade across the Indian Ocean.
More recently its important location and political stability has become crucial in laying the groundwork for Muscat to diversify the country’s economy by bolstering the private sector and attracting foreign investment.
Traditionally, Russia has prioritised investment in neighbouring GCC states with larger economies, particularly the UAE, in large part due to Dubai’s favourable tax regime. However, rising living costs in Dubai and increasing US pressure on the UAE to reduce ties with Russian companies has prompted Moscow to diversify its focus across the GCC and begin investing in Oman, too. Notably, trade relations between Moscow and Muscat have strengthened in recent years, even amid Russia’s increased isolation following the invasion in Ukraine.
Energy plays a key role in Oman’s foreign policy. Türkiye, seeking to diversify its energy imports, signed an agreement with Oman in early 2024 to supply 1 million metric tons of Omani liquefied natural gas (LNG) per year to Türkiye, which came into effect in January 2025. At the same time, GCC states, including Oman, are advancing efforts to reduce their reliance on hydrocarbons and transition to green energy.
Oman’s significant solar energy potential and renewable energy initiatives have drawn the interest of Western powers aiming to diversify their energy sources and achieve net-zero carbon emissions. As part of its Vision 2040 strategy, Oman has set ambitious renewable energy targets: 20 per cent by 2030 and 39 per cent by 2040.
In December, Oman and Belgium signed a Memorandum of Understanding (MoU) to develop green hydrogen, building on Belgium’s investment in Oman’s hydrogen facilities. Not only will that boost Oman’s emerging renewable energy sector, with the goal of producing 1 million tonnes of hydrogen annually by 2030 but it will also boost Belgium’s position as a green energy import hub in Europe.
Beyond Western partnerships, Oman has also strengthened its trade ties with China. Bilateral trade between Oman and China has consistently grown, exceeding $27 billion in 2023, with cooperation in the energy sector being a key element leading to the development of a dynamic two-way energy trade. Currently, China remains Oman’s primary importer of crude oil, while Chinese firms, leveraging their expertise in solar energy and dominance of the supply chains, have financed two solar cell production plants in Oman.
China’s Belt and Road Initiative (BRI) has further enhanced Oman’s role as a key trading partner, with significant Chinese investment in the Port of Duqm. This development underscores Oman’s growing importance to all global powers. Both the US and the UK operate military bases in Oman and also rely on the Duqm Port as a strategic logistics hub for operations in the Strait of Hormuz and the Indian Ocean.
The Strait, through which approximately 20-25 per cent of the world’s oil passes, remains a critical chokepoint. Regional threats, including Houthi attacks on Red Sea trade routes and potential future tensions with Iran, reinforce the US and UK’s commitment to maintaining strong ties with Oman as a unique and valuable GCC partner.
Leveraging a multipolar world
Ultimately, Oman’s strategic location and measured diplomacy have made it a magnet for investment from a diverse array of global powers. By effectively leveraging its unique assets, Oman has cemented its place as an important player with both economic and geostrategic significance.
Although it may lack the geopolitical clout of larger Gulf states, Oman’s pragmatic and understated approach has rendered it an indispensable partner in both regional and global affairs in a rapidly changing world.
In balancing competing interests and rival actors, Oman showcases how small and medium sized nations can strategically enhance their influence. This approach not only underscores the potential of pragmatic diplomacy but also highlights Oman’s capacity to elevate its standing as a key regional actor in an increasingly multipolar world.
The opinions expressed are those of the contributor, not necessarily of the RSAA.
