Oman’s Economic Metamorphosis: A $9.1 Billion Trade Surplus Amidst a Strategic Pivot to Non-Oil Exports and Robust UAE Partnership

Oman’s Economic Metamorphosis: A $9.1 Billion Trade Surplus Amidst a Strategic Pivot to Non-Oil Exports and Robust UAE Partnership

The Sultanate of Oman has reported a substantial trade surplus of OMR 3.555 billion (approximately USD 9.1 billion) for the first seven months of 2025, according to official data released by the National Center for Statistics and Information (NCSI). This figure, while representing a significant 34.6 percent decrease from the OMR 5.432 billion surplus recorded in the same period of 2024, unveils a far more nuanced and transformative narrative about the Omani economy. Beneath the headline-grabbing surplus lies a story of deliberate and accelerating economic diversification, resilient non-oil sector growth, and the deepening of strategic regional trade alliances, most notably with the United Arab Emirates (UAE). The reported data, covering up to July 2025, provides a compelling snapshot of an economy in the midst of a strategic pivot, successfully navigating the volatile tides of global hydrocarbon prices while laying a more sustainable and resilient foundation for its long-term future.

The decline in the overall surplus, from OMR 5.432 billion to OMR 3.555 billion year-on-year, is almost entirely attributable to a predictable correction in the oil and gas sector. The value of Oman’s oil and gas exports fell by 17 percent to OMR 8.582 billion by July 2025, down from OMR 10.344 billion a year earlier. This contraction is a direct reflection of the softer global energy prices and production adjustments that have characterized the 2024-2025 period, impacting all hydrocarbon-exporting nations. However, this traditional metric of economic health no longer tells the complete story of modern Oman. The true, and more significant, headline from the NCSI report is the powerful, counter-cyclical surge in the non-oil economy, which is rapidly becoming the new engine of Omani trade and a testament to the success of its national development framework, Vision 2040.

The Engine of Diversification: Non-Oil Exports Forge Ahead

In a powerful demonstration of economic resilience, Oman’s non-oil merchandise exports grew by a robust 11.3 percent to reach OMR 3.890 billion by the end of July 2025, up from OMR 3.497 billion during the same period in 2024. This growth is not an isolated event but part of a sustained, upward trajectory that has been building momentum for years. For instance, data from March 2024 had already shown a staggering 44.9 percent year-on-year surge in non-oil exports, indicating that the current performance is part of a deep-seated structural shift.

This impressive growth is the direct outcome of a multi-pronged national strategy focused on economic diversification. The Omani government, through its Vision 2040, has aggressively invested in and incentivized non-hydrocarbon sectors. Key industries driving this export growth include:

• Manufacturing and Processing: Oman is adding significant value to its natural resources beyond crude extraction. This includes the production and export of purified chemicals, polymers, and plastics from the industrial complexes in Sohar and Salalah. The Sultanate is positioning itself as a hub for downstream industries, transforming raw materials into higher-value finished and semi-finished goods.
• Metallurgy and Minerals: The metals sector, particularly the production of aluminum and its derivatives from the Sohar Aluminum smelter, represents a major component of non-oil exports. Further value addition in this sector, including aluminum rolling and casting, is enhancing export value.
• Food and Agri-business: Investments in agricultural technology and fisheries are bearing fruit, with Omani dates, seafood, and processed food products finding growing markets in the region and beyond.
• Logistics and Re-exports: The strategic development of ports like Duqm, Sohar, and Salalah is facilitating trade flows, with the re-export sector serving as a critical bridge between global markets and the wider Gulf region.

The 11.3 percent growth in this segment is particularly significant because it occurred against a backdrop of a 9.2 percent overall decline in total merchandise exports. This indicates that the non-oil sector is not merely a supporting actor but is now a critical shock absorber, mitigating the impact of hydrocarbon price volatility and actively driving the nation’s trade narrative forward.

The Re-Export Hub: Oman’s Strategic Logistical Prowess

Further reinforcing its diversified trade profile, Oman’s re-export sector demonstrated stable and resilient performance, registering a slight increase of 0.5 percent to OMR 1.04 billion as of July 2025, compared to OMR 999 million in the same period of 2024. While the growth is modest, its consistency is key. It underscores Oman’s enduring role as a reliable and strategic re-export hub within the Gulf Cooperation Council (GCC) and a vital node in regional and global supply chains.

This performance is underpinned by massive investments in world-class logistics infrastructure. The Port of Duqm, with its vast industrial zone and strategic location outside the Strait of Hormuz, is emerging as a mega-hub for heavy industries, ship repair, and logistics. Similarly, the Port of Sohar continues to expand its container and bulk handling capacities, seamlessly integrated with the Sohar Freezone. These facilities offer competitive advantages, including deep-water access, advanced cargo handling equipment, and streamlined customs procedures, making Oman an attractive transshipment point for goods destined for the wider GCC, East Africa, and South Asia. The stability of the re-export figure, even during a period of global economic uncertainty, speaks volumes about the confidence international traders place in Omani ports and its trade ecosystem.

The Import Side: A Barometer of Robust Domestic Demand

On the other side of the trade ledger, Oman’s total merchandise imports rose by 5.5 percent to OMR 9.921 billion by the end of July 2025, up from OMR 9.407 billion in the corresponding period of 2024. This uptick is a strong, positive indicator of the health of the domestic economy. Rather than signaling a weakness, it reflects sustained and growing consumer demand, ongoing industrial activity, and continued investment in infrastructure and development projects.

The types of goods being imported provide further insight into the nation’s economic priorities. A significant portion comprises capital goods, machinery, and industrial equipment, which are essential for the ongoing expansion of the non-oil manufacturing and processing sectors. Furthermore, strong imports of consumer goods point to healthy household spending, supported by a stable economic environment and a growing population. This robust import demand confirms that the slowdown in the overall trade surplus is not a function of a contracting domestic economy, but rather a rebalancing act where strong internal demand and a strategic export shift are occurring simultaneously.

The UAE Partnership: The Bedrock of Regional Trade Integration

Perhaps the most telling data point within the NCSI report pertains to the deepening economic integration with the United Arab Emirates. The UAE has emerged as the unequivocal leader across multiple trade metrics, solidifying a partnership that is central to Oman’s diversification and regional trade strategy.

• Leading Non-Oil Export Destination: The UAE topped the list as the largest destination for Omani non-oil exports by May 2025, with exports valued at OMR 485 million—a remarkable increase of 22.9 percent from May 2024. This explosive growth highlights the seamless market access and strong commercial ties between the two nations, facilitated by their shared GCC membership and increasingly harmonized regulations.
• Primary Source of Imports: The UAE also stood as the primary source of imports into Oman, with goods worth OMR 1.651 billion. This reflects the highly integrated supply chains, where components, raw materials, and finished goods flow freely across the border, supporting manufacturing and consumption in both countries.
• Top Country for Re-exports: Completing a trifecta, the UAE was the top destination for Omani re-exports, registering OMR 248 million. This indicates that Oman serves as a key logistical conduit for goods entering and leaving the UAE, particularly for shipments utilizing its less congested ports and land transport routes.

This multi-faceted trade relationship with the UAE is a microcosm of successful regional economic integration. It moves beyond simple bilateral trade to a complex ecosystem of co-production, shared logistics, and complementary economic strengths. The relationship is bolstered by major joint infrastructure projects, such as the Oman-UAE Railway, which, upon completion, will further reduce logistical costs and deepen this integration, creating a powerful combined economic bloc.

Other Key Trading Partners: A Diversified Global Footprint

While the UAE partnership is paramount, Oman’s trade relationships are commendably diversified. The data shows a healthy spread of key partners, reducing reliance on any single market:

• Saudi Arabia: Following the UAE, the Kingdom of Saudi Arabia is a crucial partner for non-oil exports, receiving Omani goods valued at OMR 451 million by May 2025. As both nations pursue ambitious diversification agendas under their respective vision documents, the potential for cross-investment and trade in non-oil goods and services is immense.
• India: As the third-largest destination for non-oil exports (OMR 280 million), India represents a vital Asian market for Omani products, particularly minerals, chemicals, and plastics. The historical and cultural ties between the two nations provide a strong foundation for expanding this relationship.
• Iran: In the re-export sector, Iran was the second-largest destination after the UAE, with OMR 109 million. This underscores Oman’s unique geopolitical position and its role as a traditional trading partner and neutral mediator, facilitating trade flows that might be more challenging for other nations.

Historical Context and the Road Ahead

To fully appreciate the 2025 data, it must be viewed within a broader historical context. The earlier snapshot from May 2025 already showed a trade surplus of OMR 2.454 billion, a 38.5 percent decrease year-on-year, driven by a 15.2 percent drop in oil and gas exports. Even then, however, the non-oil sector was showing promising growth of 7.2 percent. Looking further back to the first quarter of 2024, the trade surplus was OMR 2.61 billion, a significant increase from OMR 1.93 billion in Q1 2023, fueled in part by a 44.9 percent explosion in non-oil exports.

This historical view reveals a clear pattern: the Omani economy is undergoing a managed and deliberate transition. The fluctuations in the overall trade surplus are heavily influenced by the global hydrocarbon cycle, a variable largely outside Oman’s control. However, the consistent, strong growth in non-oil exports is a variable that Oman is actively and successfully controlling through sound policy and strategic investment.

The challenges ahead are not insignificant. The global economic environment remains uncertain, and competition for foreign direct investment in non-oil sectors is fierce within the region. However, Oman’s strategic investments in logistics, manufacturing, and renewable energy, coupled with its political stability and improving business climate, position it favorably.

In conclusion, the OMR 3.555 billion trade surplus for the first seven months of 2025 is more than just a number; it is a powerful symbol of a nation in transition. While the decrease from the previous year highlights the persistent challenge of hydrocarbon dependency, the roaring success of the non-oil export sector and the strategically vital trade partnership with the UAE tell a more profound story of resilience, diversification, and future-proofing. Oman is not just weathering the storm of lower oil revenues; it is actively building a new, more sophisticated, and sustainable economic vessel, setting a compelling example for resource-rich economies worldwide. The foundations laid today are paving the way for a more resilient and prosperous Omani economy, firmly anchored beyond the oil and gas sector.