Oman’s Resilience to Hormuz Blockage: What Moody’s and S&P Ratings Mean for Investors and Businesses
MUSCAT: Oman’s strategic location outside the Arabian Gulf and the Strait of Hormuz—currently a major hotspot of conflict between Iran and Western powers allied with Israel—positions it more favorably than other GCC countries to maintain largely uninterrupted energy and commodity exports, according to leading international ratings agencies.
Moody’s Ratings highlighted that Oman, not dependent on the Strait of Hormuz for its exports, could benefit from elevated prices and uninterrupted shipping. Similarly, S&P Global Ratings noted that Oman’s export facilities in Suhar (on the Sea of Oman) and Al Duqm (on the Arabian Sea coast) completely avoid the Strait. Despite some related infrastructure being affected by Iranian actions, Oman is seen as less vulnerable to risks from a potential Strait blockade. These container facilities may serve as alternatives to Gulf ports, supporting regional trade routes, potentially strengthening Oman’s external position and fostering economic growth.
Moody’s also pointed out that the overall credit impact will depend on the “duration of energy disruption and instability” related to the Iran conflict. While core energy infrastructure has not been directly targeted, marine traffic through the Strait has nearly halted as insurers withdraw coverage and shipping companies avoid the area amid ongoing hostilities. Several regional ports have suspended operations due to Iranian strikes, and much of the region’s airspace remains closed or heavily restricted.
According to Moody’s, the credit outlook hinges on whether any disruption at the Strait proves temporary and whether alternative arrangements ensure continued energy availability. In the short term, oil reserves stored outside the Gulf—such as cargoes on offshore tankers that departed before the attacks—provide a buffer, similar to the mechanism following the 2019 Saudi oil facility attacks, helping to avert major export losses. Additionally, the planned OPEC+ production increase of 206,000 barrels per day from April offers limited further mitigation.
Moody’s baseline scenario assumes the conflict will be relatively short-lived, lasting a matter of weeks, with navigation through the Strait resuming at scale thereafter. Under this scenario, Moody’s considers there would be no significant credit impact on rated issuers.
However, a prolonged disruption could trigger a sustained rise in oil prices, increase global risk aversion, and widen credit spreads in high-yield markets. This would heighten refinancing risks for issuers facing near-term debt maturities, especially within energy-intensive and cyclical sectors already challenged by rising input costs.
S&P echoed these concerns, warning that an effective closure of the Strait could spread credit stress across multiple sectors. Shipping companies have already begun cancelling voyages due to threats from Iranian naval forces and soaring insurance premiums. The agency emphasized that the severity and duration of the conflict will determine the overall impact, with key transmission channels including trade and supply chains—particularly energy—energy prices and export volumes (notably to Asia), capital flows, tourism, and possible population movements.
S&P further warned that borrowing costs are expected to rise sharply in the near term, increasing risks for issuers with significant or imminent refinancing needs.
In summary, Oman’s geographic positioning outside the immediate conflict zone and its alternative export infrastructure could provide it with a relative advantage in sustaining trade flows and economic stability amid ongoing regional tensions.
Special Analysis by Omanet | Navigate Oman’s Market
Oman’s geographic advantage of being outside the Strait of Hormuz positions it as a strategic beneficiary amid regional tensions, offering businesses greater stability in energy exports and trade flows. Smart investors and entrepreneurs should capitalize on Oman’s potential role as a regional logistics and export hub, while remaining vigilant of risks from prolonged regional instability that could disrupt global markets and elevate financing costs. This scenario underscores the importance of diversifying supply chains and preparing for volatility in energy prices and credit markets.
