S&P more than doubles Oman growth forecast to 3.5% for 2026

Summary

• S&P raised Oman's 2026 growth forecast to 3.5%, up from a previous 1.6% estimate.
• The agency cited trade routes that bypass the Strait of Hormuz and expanding hydrocarbon capacity.
• The upgrade signals Oman's location is now an economic asset rather than a shipping vulnerability.

The latest

Oman's economy is now projected to expand 3.5% in 2026, more than double the 1.6% S&P Global Ratings had previously forecast, according to The National. The ratings agency pointed to trade routes that run outside the Strait of Hormuz and to rising oil and gas production capacity. It kept Oman's long-term rating at BBB- with a stable outlook.

Details

• The revision: S&P lifted its 2026 growth projection for Oman to 3.5% from 1.6%, according to The National. The scale of the change is unusual for a sovereign forecast update within a single cycle, and it places the sultanate well above the 2.3% expansion the economy recorded in the previous year.
• The stated driver: An S&P analyst said Oman's trade routes remain unobstructed, "which will allow the country to grow its oil and gas production capacity." Oman's ports sit on the Arabian Sea outside the Strait of Hormuz, the chokepoint through which most Gulf crude exports must pass.
• The production target: Oman is targeting combined oil and gas production capacity of 1.2 million barrels per day, according to The National. The agency did not attach a timeline to when that capacity level is expected to be reached, nor break out the oil and gas components separately.
• Beyond hydrocarbons: S&P also credited growth in trade, logistics, information technology and financial services for the improved outlook. That mix points to the non-oil side of the economy carrying part of the expansion, rather than the revision resting solely on higher barrel counts.
• The Fitch view: Fitch forecasts Oman's growth slowing to 2.5% in 2027 and 2.4% in 2028, according to The National. That trajectory implies the agencies treat 2026 as a peak year driven by capacity additions, with the economy settling back toward its recent trend rate afterwards.
• Inflation path: Consumer price growth is forecast at 2.5% for 2026 before easing to a range of 1% to 2% in subsequent years. A slowdown in inflation alongside faster output growth would leave real gains intact rather than eroded by rising prices.
• The rating: S&P maintained Oman at BBB- long-term with a stable outlook. That is one notch above sub-investment grade, meaning the sultanate remains inside the investment-grade band that governs which institutional funds can hold its debt.
• Fiscal buffers: The agency cited liquid government assets exceeding 40% of GDP and foreign currency reserves near 20% of GDP as support for the rating. Those cushions give Muscat room to absorb an oil price shock without immediate recourse to external borrowing.

Background

Oman's economy grew 2.3% in the previous year, according to The National. Its Arabian Sea coastline places its main export terminals outside the Strait of Hormuz, the waterway carrying the bulk of Gulf oil shipments.

Between the lines

The upgrade turns geography into a rating input. S&P's stated reasoning rests on routes that remain unobstructed and on capacity Oman can add because of that access, which reframes the sultanate's position outside Hormuz as a commercial advantage rather than a neutral fact. But Fitch's 2.5% and 2.4% projections for 2027 and 2028 suggest the agencies see the boost as capacity-led and finite, not a permanent shift in Oman's growth rate.

What's next

Watch whether Oman reaches its 1.2 million barrels per day capacity target, the next S&P rating review and whether the BBB- outlook moves off stable, and confirmation of whether 2026 inflation lands near the 2.5% forecast.

Source: The National, citing S&P Global Ratings and Fitch