Lower oil prices plunge Oman into fiscal deficit 

Oman posted a fiscal deficit for the first six months of the year, as lower oil prices squeezed revenues for the GCC’s smallest economy and expenditures rose.  

The sultanate swung into deficit of $672 million (259 million Omani riyals) at the end of the second quarter, from a surplus of $1 billion (391 million Omani riyals) recorded from a year-earlier period. 

Revenues for the six months to the end of June fell 5.7% on an annual basis to $15.17 billion (5.8 billion Omani riyals), in large part due to a fall in hydrocarbon revenue, the Omani finance ministry said in its quarter bulletin. 

Net oil revenue dipped 10% to $7.8 billion at the end of Q2 2025, while net gas revenue slumped 6% to $2.3 billion. 

Average realized oil prices stood at $75 a barrel at the end of the year’s second quarter, down 8.5% from $82 per barrel from a year-earlier period. 

The sultanate’s expenditures climbed 5% year-on-year to reach $15.83 billion as the government stepped up development expenditure of ministries and government units. 

Subsidy allocations included $880 million to the electricity sector, $750 million to the social protection system, and $114 million for oil products. Public debt stood at $36.6 billion at the end of Q2 2025. 

The International Monetary Fund has projected Oman’s economy to grow at 2.4% this year and 3.7% in 2026. 

“This expected performance is driven by the phase-out of OPEC+ curbs and strong nonhydrocarbon growth, underpinned by ongoing investments in logistics, manufacturing, renewable energy, and tourism, but held back by the potential slowdown in key trading partners’ growth,” the IMF said after concluding a staff visit to Oman in May. 

The sultanate, which is the largest non-OPEC oil and natural gas producer in the Middle East, is part of the broader OPEC+ alliance. 

Inflation remains low, edging up from 0.6% in 2024 to 0.9% year-over-year during January-April 2025, the fund added. 

Oman is looking to diversify its sources of income away from oil and will impose a 5% levy on taxable income for individuals earning over $109,091 annually (42,000 Omani riyals), starting 2028.

The move supports the country's 2040 Vision under which it aims to achieve 15% of its gross domestic product from non-oil sources by 2030 and 18% by 2040.