The Oman Question

Every analysis of the Strait of Hormuz focuses on Iran. This is a mistake. At the narrowest point of the strait, both inbound and outbound shipping lanes fall within Omani territorial waters. Iran controls the northern approaches — the deep-water channels, the island garrisons, the missile batteries arrayed along its coastline. Oman controls the bottleneck itself. Neither country alone controls the entire transit. Any post-war settlement that ignores this is built on sand.

The Omani dimension of the Hormuz question is routinely underestimated, partly because Oman wants it that way. For five decades, the Sultanate has pursued a foreign policy of deliberate self-effacement — quiet, reliable, available to all sides, aligned with none. That posture has made Oman the Gulf’s indispensable mediator. It has also obscured the geographic reality that Oman holds the single most valuable piece of real estate in global energy transit.

The Musandam Peninsula — Crown Jewel and Achilles’ Heel

The Musandam Peninsula juts northward from the Arabian coast like a jagged finger, separating the Persian Gulf from the Gulf of Oman. Its roughly 1,800 square kilometers of dramatic fjord-like inlets have earned it the nickname “the Norway of Arabia.” The comparison is apt geographically — steep limestone cliffs drop into turquoise waters, and narrow channels wind between towering rock walls — but misleading in every other sense. Norway is one of the wealthiest nations on earth. Musandam is strikingly underdeveloped.

The peninsula’s population is approximately 49,062, concentrated mostly around the port town of Khasab. The local economy revolves around fishing, small-scale trade, and a modest tourism industry. How modest? Musandam has 13 hotels with a total of 470 rooms. That is the entire hospitality infrastructure of a territory that overlooks one-fifth of the world’s daily oil supply.

Tourism had been growing. In the 2024/25 season, 63,781 cruise tourists visited Musandam — a meaningful number for a region with so few beds. Then the war came. When insurance premiums for Gulf transits spiked above 2 percent of hull value, cruise lines suspended all Persian Gulf operations. The tourists vanished. Khasab’s waterfront, built to accommodate day-tripping passengers from luxury liners, went quiet.

Musandam’s most consequential feature, however, is not geographic but political. It is an exclave — physically separated from mainland Oman by a strip of UAE territory roughly 70 kilometers wide. All overland access to Musandam requires transiting through the UAE via immigration checkpoints at the border. There is no Omani highway connecting the peninsula to the rest of the country. There is no bridge, no tunnel, no sovereign corridor.

This means the UAE holds an effective veto on Omani access to its own territory at the strait. If Abu Dhabi chose to restrict border crossings — for any reason, under any pretext — Musandam would be cut off from the Omani mainland. Supplies, personnel, military reinforcements: all of it moves through UAE territory. This geographic vulnerability constrains every decision Muscat makes about the strait. Oman cannot pursue a Hormuz policy that Abu Dhabi finds intolerable, because Abu Dhabi can isolate Musandam with a phone call.

The Gulf’s Most Distinctive Relationship

The Iran-Oman relationship is unlike any other in the Persian Gulf. It is older, deeper, and stranger than the alliances and rivalries that typically define the region’s politics.

The foundational debt dates to the 1970s. During the Dhofar Rebellion, a Marxist insurgency in Oman’s southern province threatened to topple the newly installed Sultan Qaboos. Iran, under Shah Mohammad Reza Pahlavi, sent troops to help crush the revolt. Iranian soldiers fought and died on Omani soil to preserve the Sultanate. When the Shah fell in 1979 and the Islamic Republic replaced him, most Gulf states severed or froze relations with Tehran. Oman did not. The debt was too deep, the gratitude too ingrained, and the strategic logic too compelling.

In the 46 years since the Iranian Revolution, Oman has remained the only Gulf Cooperation Council state maintaining consistently warm ties with Tehran through every crisis — the Iran-Iraq War, the tanker wars, the nuclear standoff, the proxy conflicts, and now the 2026 war. The relationship has not merely survived. It has accelerated.

In 2024, bilateral trade between Iran and Oman reached $1.33 billion, a 52 percent increase over 2023. The number of Iranian companies registered in Oman surged from 3,757 to 6,511 in a single year — a 73 percent increase that reflects both commercial opportunity and sanctions evasion. Iran’s sanctions-hit banks, including Bank Saderat and Bank Melli, still operate branches in Oman. A Preferential Trade Agreement between the two countries was ratified by Royal Decree in 2025, deepening the commercial integration.

The relationship extends beyond trade. The Houthis — Iran’s closest regional ally — maintain a political office in Muscat. Iran and Oman conduct annual joint naval search-and-rescue exercises in the strait. And there is the perennially deferred mega-project: a proposed 400-kilometer undersea gas pipeline from Iran to the Omani port of Sohar, covered by a memorandum of understanding signed in 2013 and valued at roughly $60 billion. Sanctions have kept the pipeline on paper, but the MOU remains in force, a standing invitation for the day the sanctions lift.

“Friend to All, Enemy to None”

Oman’s foreign policy doctrine is often described as neutrality. This undersells it. Neutrality is passive — a decision not to take sides. Oman’s posture is active, calculated, and meticulously maintained. It is a strategic asset, cultivated over half a century and guarded with the same vigilance other nations reserve for military secrets.

The Sultanate is the only GCC state maintaining simultaneously warm relations with Iran, the United States, Saudi Arabia, the UAE, and Israel. It is the back channel everyone uses and no one acknowledges. The secret talks that produced the 2015 Iran nuclear deal began in Muscat. The Houthi ceasefire negotiations ran through Omani intermediaries. When a hostage needs releasing, a message needs delivering, or a diplomatic impasse needs a quiet exit, the call goes to Muscat.

The American defense relationship with Oman is deep but deliberately low-profile. The US maintains three Air Force pre-positioning sites in Oman, with equipment sufficient for 26,000 personnel. American forces have access to bases at Thumrait and Masirah Island. These are access agreements, not permanent bases — a distinction that matters enormously. Permanent bases would compromise Oman’s neutrality. Access agreements preserve it. The US military can use Omani facilities when needed, but there is no visible American garrison, no flag-waving presence, no political liability for Muscat.

During the 2026 crisis, Oman’s balancing act reached its most extreme expression. Muscat condemned the US-Israeli strikes on Iran — the only GCC state to do so. When Iran’s Supreme Leader Ali Khamenei died and was succeeded by his son Mojtaba, Oman was among the first to send congratulations. And when Trump assembled his naval coalition to force open the strait, Oman refused to join.

Every one of these decisions was consistent with the doctrine. Condemn the strikes: maintain credibility with Tehran. Congratulate the new Supreme Leader: preserve the relationship. Refuse the coalition: avoid taking a side that would permanently compromise the mediator role. Each move was a calculated investment in a reputation that took 50 years to build.

The Razor’s Edge (2026)

And then Iran bombed Oman.

On March 11, Iranian missiles struck the port city of Salalah on Oman’s southern coast. On April 3, it happened again. Three Omani citizens were killed. The strikes were not targeting Oman — Salalah sits near Houthi supply routes and the missiles may have been aimed at coalition naval assets — but the result was the same. Iranian ordnance hit Omani territory. Omanis died.

Iran’s response was revealing. Foreign Minister Araghchi told his Omani counterpart that the strikes were “not their choice” — that the IRGC had acted independently of the civilian government. Oman expressed “disapproval and unequivocal condemnation.” The language was the strongest Muscat had used against Tehran in decades.

The IRGC-acting-independently explanation is both plausible and devastating. Plausible because the IRGC’s mosaic defense doctrine gives local commanders significant autonomy, and the fog of a multi-front war makes centralized targeting decisions difficult. Devastating because it undermines the entire premise of any future governance partnership. The incident raised questions about how Iran’s decentralized military doctrine would interact with the centralized decision-making required for strait governance.

The repeated targeting of Omani territory erodes Iran’s credibility as a governance partner in ways that no diplomatic apology can fully repair. Every future conversation about joint administration of the strait will carry the subtext of Salalah. Every reassurance from Tehran will be weighed against the fact that Iranian missiles killed Omani citizens while the two countries were ostensibly on the same side.

And yet Oman still refused to join Trump’s coalition. This is the paradox at the heart of Omani foreign policy in 2026: the Sultanate is being bombed by the country it refuses to oppose, while declining to join the coalition of the country that is supposedly its security guarantor. The neutrality doctrine is holding, but the stress fractures are visible. Oman’s value as a mediator depends on being trusted by all sides. The war is eroding that trust from every direction simultaneously.

What Oman Would Gain from Strait Governance

If the post-war settlement includes any form of strait governance — tolls, fees, a joint administration, a Montreux-style treaty — Oman stands to gain enormously.

Start with revenue. More than 100 ships transit the Strait of Hormuz every day under normal conditions. If a toll regime were established at rates comparable to the Suez Canal, and if Oman received a 50 percent share as co-administrator of the bottleneck, the annual revenue could approach $7 billion. That figure represents approximately 2.8 percent of Oman’s GDP — a transformative income stream from a geographic fact that requires no extraction, no refining, and no labor force.

Beyond revenue, formal governance status would elevate Oman from a passive coastline state to an active co-administrator of global energy transit. This is not a symbolic distinction. It would give Muscat strategic leverage with every major power — the United States, China, Europe, Japan, India — all of whom depend on oil flowing through Omani waters. That leverage translates into diplomatic weight, investment flows, and security guarantees that the Sultanate currently obtains only through the goodwill of larger partners.

There is also the Musandam dividend. Any settlement that formalizes Oman’s role at Hormuz would necessarily involve developing Musandam’s infrastructure — ports, surveillance systems, communication networks, perhaps even a sovereign land corridor to the mainland. The peninsula would go from a scenic backwater to a strategic hub, with all the investment that implies.

A more realistic scenario involves not full toll revenue but joint service fees: traffic management, search and rescue coordination, environmental protection, vessel tracking. These services already exist in various forms. Formalizing them with a fee structure could generate between $210 million and $1 billion per year — smaller than full tolls but legally defensible under the United Nations Convention on the Law of the Sea, which permits coastal states to charge for specific services rendered.

What Oman Would Lose

The costs of partnership with Iran at the strait would be catastrophic.

The most immediate casualty would be Oman’s neutrality. For 50 years, the Sultanate’s foreign policy has rested on a single principle: friend to all, enemy to none. Any formal partnership with Iran in governing the strait would fundamentally alter that posture. Oman would no longer be the neutral back channel. It would be a party to the dispute. The mediator role — the source of Oman’s outsized diplomatic influence — would be destroyed.

The UAE would retaliate through Musandam. Border restrictions could isolate Oman’s stake in the strait within days. Abu Dhabi would not need to take military action or issue public threats. A simple administrative decision to “enhance border security procedures” at the Musandam checkpoints would suffice. Supplies slow. Tourism stops. Military resupply becomes impossible. The exclave becomes a liability rather than an asset.

The American military relationship would be at risk. The pre-positioning sites, the base access agreements, the quiet intelligence sharing — all of it depends on Oman being perceived as a reliable partner rather than an Iranian co-governor of a chokepoint that the US Navy has patrolled for four decades. Washington would not need to issue an ultimatum. The access agreements would simply not be renewed.

GCC isolation or expulsion is a real possibility. Oman has always been the GCC’s outlier, tolerated because its neutrality serves collective interests. A partnership with Iran at Hormuz would cross every line the other Gulf states have drawn. Saudi Arabia, the UAE, Kuwait, and Bahrain — all of which export through the strait — would view Omani co-governance as a direct threat to their economic sovereignty.

Finally, there is the sanctions risk. Any formal arrangement with Iran that involves revenue sharing would almost certainly trigger US secondary sanctions on Oman. The economic consequences would dwarf any toll revenue.

The Three Scenarios

Oman’s options in the post-war period reduce to three broad scenarios, each with distinct probabilities and consequences.

The first is active partnership with Iran. This would mean joining some form of joint governance, sharing toll revenue, and aligning Oman’s strait policy with Tehran’s. The probability is very low. It would require Oman to abandon 50 years of foreign policy, sacrifice its relationships with the United States and the GCC, and expose Musandam to UAE retaliation. The gains, while potentially large in revenue terms, are dwarfed by the strategic losses. No Omani decision-maker with a clear understanding of the costs would choose this path.

The second is neutral tacit acquiescence — and this is what is happening now. Oman condemns violence verbally. It mediates quietly. It takes no military action on either side. It maintains its relationships with both Tehran and Washington. It accepts the costs of the war — lost tourism, dead citizens, disrupted trade — as the price of preserving the doctrine. This is the path of least resistance and the one most consistent with Omani strategic culture.

The third is active opposition to Iran — joining the US coalition, opening Omani facilities for military operations against Iranian forces, and aligning overtly with Washington. The probability is also very low. Musandam would become a frontline target. The Iran relationship, cultivated since the 1970s, would be destroyed. And Oman would lose the neutrality that is its single most valuable strategic asset.

The Malacca Model

If there is a framework that could accommodate Oman’s interests without destroying its neutrality, it is probably something resembling the Strait of Malacca model.

Malacca, the 550-mile passage between Malaysia, Singapore, and Indonesia, handles roughly 100,000 ship transits per year. It is governed not by a single authority but by coordinated patrols, shared surveillance, and joint search-and-rescue operations among the three littoral states. There is no toll. There is no formal governance body. But there is a functional cooperative framework that ensures the strait remains open and safe.

Applied to Hormuz, this model would involve Iran and Oman conducting coordinated patrols, sharing surveillance data, and jointly operating search-and-rescue capabilities. This is not hypothetical — they already do this bilaterally through their annual naval exercises. A Malacca-style framework would simply formalize and expand what already exists.

The appeal of this model is that it creates no formal “authority” that would provoke international opposition. There is no toll that would violate UNCLOS. There is no sovereignty claim that would trigger sanctions. There is no governance structure that would force Oman to choose sides. It is cooperation without commitment — exactly the kind of arrangement Oman has spent 50 years perfecting.

Three barriers stand in the way. First, UNCLOS prohibits charging tolls for transit through international straits, and any framework that edges toward revenue extraction will face legal challenges. Second, the trust deficit created by the Salalah strikes makes expanded cooperation with Iran politically toxic in Muscat, even if strategically logical. Third, the UAE’s Musandam veto means that any arrangement Abu Dhabi opposes can be effectively blocked without a single vote being cast.

But if any post-war settlement includes revenue-sharing mechanisms — service fees, environmental levies, traffic management charges — Oman is uniquely positioned to shape the terms. Geography ensures this. The shipping lanes run through Omani waters. No governance framework that excludes Oman is credible. No toll regime that does not compensate Oman is enforceable. Whatever emerges from the negotiations, Muscat will have a seat at the table — not because it demanded one, but because the table is built on Omani soil.

The question is whether Oman can convert that geographic fact into durable institutional influence without sacrificing the neutrality that makes it valuable in the first place. It is the defining challenge of Omani foreign policy in the post-war era, and there is no precedent for how to solve it.

In the final installment of this series, we turn to the event that was supposed to resolve all of these questions — the ceasefire of April 7 — and examine why it collapsed within 24 hours, what the Islamabad talks can realistically achieve, and what the three most likely endgames look like for the Strait of Hormuz.