Standard & Poor's fixed Oman's sovereign credit rating at "BBB-" in the long term and "A-3" in the short term, with a "stable" outlook, at a time when it raised its expectations for the growth of the Omani economy during the current year to 3.5 percent, from 1.6 percent in its previous estimates, driven by increased oil and gas production and the continued flow of exports through routes that do not depend on the Strait. Hormuz.
The agency said that Oman's location gives it a comparative advantage in light of the current geopolitical turmoil. Its oil and gas exports do not depend on the Strait of Hormuz, and it can access global markets through ports with a direct connection to the Arabian Sea, including Duqm, Mina Al Fahal, and Salalah.
She pointed out that hydrocarbons represent about 30 percent of Oman’s gross domestic product, 50 percent of commodity exports, and 70 percent of government revenues, which makes the continuation of supply chains and the flow of exports a supportive factor for growth, revenues, and strengthening the financial situation.
Standard & Poor's expects Oman's oil production to rise to about 1.1 million barrels per day in 2026, compared to about 1.03 million barrels per day in 2025, with the possibility of production reaching 1.2 million barrels per day during the period 2027-2029. The agency had monitored an increase in oil and gas production by about 16 percent until July compared to the end of last year.
The agency's forecasts for real domestic product growth are based on increased activity in the hydrocarbons sector, with estimates that growth will average about 2.4 percent during the period 2027-2029. It also expects the non-oil economy to grow, supported by the trade, logistics, information technology, and financial services sectors.
Stronger financial and external margins
The agency said that the stable outlook reflects its belief that liquid government assets, which exceed 40 percent of gross domestic product, and foreign exchange reserves approaching 20 percent of output, will provide margins of protection against negative geopolitical developments, with the exception of a long-term escalation scenario targeting the energy infrastructure and civil facilities in the Sultanate.
Standard & Poor's expects public finances to turn into a surplus of 4.8 percent of GDP in 2026, based on the assumption that the average price of Brent crude will remain at $95 per barrel during the remainder of the year. It also expects a financial surplus of 2.2 percent of output in 2027, before the financial situation approaches balance in 2028 and 2029 with the decline in oil prices.
On the external level, the agency expects export flows to rise by about 35 percent during 2026, which supports recording a current account surplus equivalent to 3.5 percent of the gross domestic product. This surplus is expected to gradually decline to about 1.8 percent of output by 2029.
It also expects foreign exchange reserves to remain in a range between $19 and $21 billion until 2029, after reaching about $19.5 billion at the end of June 2026.
Meanwhile, the agency expects the government to remain in a net asset position over the period 2026-2029, with total government debt stabilizing at less than 30 percent of GDP by 2029, compared to about 32 percent in 2025, and after a high of 68 percent following the pandemic.
Reform and diversification
Standard & Poor's believes that the economic reform agenda in Oman continues to advance, with improved coordination between ministries and enhanced oversight, in a way that supports the goals of "Oman Vision 2040." She indicated that a number of the targets of the Tenth Development Plan for the period 2021-2025 were close to being achieved or exceeded, including the growth of the non-oil sector, which reached 3.9 percent, compared to a target of 3.2 percent.
The agency expected the eleventh development plan for the period 2026-2030 to continue to focus on deepening local capital markets and enhancing financial regulation, noting that the market value of the Muscat Stock Exchange is equivalent to about 37 percent of the gross domestic product.
She also pointed out that the increase in handling traffic in Omani ports strengthens the Sultanate’s position as an alternative center for transport and trade in the region. During the first half of 2026, cargo volumes increased at Salalah Port by about 15 percent and in Sohar Port by about 52 percent, according to agency estimates.
In the energy sector, Oman continues to invest in renewable energy projects, green hydrogen and liquid ammonia, while renewable energy increased from about 50 megawatts in 2021 to more than 1,600 megawatts in 2025.
Despite these supportive factors, the agency maintained its estimates that geopolitical risks will remain, assuming that unrest in the Middle East continues until 2027. It said that the duration and scale of the conflict and its potential impact on commodity prices, supply chains, economies and credit conditions still involve a high degree of uncertainty.
Investors' appetite returned to global stocks during the week ending September 25, driven by renewed optimism about artificial intelligence investments and a decline in oil prices, ending a two-week wave of net outflows, despite a sell-off in bond markets that pushed government debt yields to high levels.
LSEG Lipper data showed that investors pumped a net $44.1 billion into global equity funds, the largest weekly net purchases since July 8, according to Reuters.
Demand for technology sector funds was strengthened thanks to strong consumer demand for the “Muse” application, affiliated with Meta, which topped the list of the most downloaded applications in the United States. South Korea's record exports during the first 20 days of September, driven by rising semiconductor shipments, also boosted optimism about demand for electronic chips.
Goldman Sachs strategists said this week that artificial intelligence investments are driving about half of the earnings per share growth in the Standard & Poor's 500 index this year.
US Treasury bonds
The return in demand for stocks came despite a sell-off in the government bond market that pushed borrowing costs sharply higher. The 30-year US Treasury bond yield rose to its highest level in 22 years at 5.5016 percent on Thursday, with stronger-than-expected economic data and expectations of further tightening by the Federal Reserve prompting investors to reassess interest rate prospects.
Inflows into US equity funds jumped to the highest level in 3 months, recording $37.6 billion during the week. European and Asian equity funds also recorded weekly net purchases of $2.26 billion and $2.21 billion, respectively.
At the sector level, technology funds attracted $5.29 billion, the largest weekly inflow since July 29. Investors also pumped $804 million into health care funds and $492 million into luxury consumer goods funds.
Global bond funds recorded net inflows of $9.68 billion during the week, after marginal net outflows of $73.58 million in the previous week.
Short-term bond funds and loan participation funds attracted significant inflows of $2.5 billion and $1.4 billion, respectively. In contrast, government bond funds recorded net outflows of $1.47 billion, ending a two-week series of inflows.
Investors continued to withdraw their money from money market funds for the second week in a row. Net outflows amounted to $605 million.
In the commodity funds sector, gold and other precious metals funds attracted $885.6 million, recording weekly inflows for the tenth time over the past 11 weeks. Energy funds also recorded net purchases of $89.26 million.
Emerging markets
In emerging markets, investors pumped $548.99 million into bond funds, a shift from net sales of $158.22 million in the previous week. Equity funds also recorded a marginal weekly inflow of $29.3 million, after two consecutive weeks of outflows, according to data that included 29,018 funds.
In details of US stock funds, LSEG Lipper data showed that investors bought shares in US stock funds with a net value of $37.6 billion, the largest weekly net purchase since June 17. Multi-cap funds attracted $395 million, while mid-cap and small-cap equity funds recorded outflows of $372 million and $1.02 billion, respectively.
At the level of US sector funds, investors pumped $4.89 billion into technology funds, in the largest weekly inflow since July 29. They also invested $515 million in consumer discretionary funds, while withdrawing $2.53 billion from financial sector funds.
At the same time, inflows into US bond funds rose to $5.93 billion during the week, compared to about $562 million in the previous week. Investors bought $4.15 billion worth of taxable domestic fixed income funds, marking the largest weekly net purchase since June 3.
Government bond funds, short- and medium-term treasury bonds, short- and medium-term investment-grade bond funds, and loan participation funds also attracted inflows of $2.15 billion, $1.63 billion, and $1.31 billion, respectively. Meanwhile, money market funds attracted net investments of about $11 billion, ending a two-week wave of outflows.
A survey published on Friday showed US consumer confidence fell to its lowest level in four months in September, amid fears that rising inflation will erode households' purchasing power.
The University of Michigan, which conducts periodic surveys of consumer opinions, said that the consumer confidence index fell in its final reading for this month to 48.1 points, compared to 51.7 points in August. However, the reading was higher than the initial estimate of 47.8 points, and also exceeded the expectations of economists polled by Reuters, amounting to 47.6 points.
The index has declined by 15 percent since January. The University of Michigan indicated a decline of about 10 percent in consumers’ assessment of their current financial situations and their financial expectations for the coming year, as concerns about rising prices continue to escalate.
“Overall, the interviews reveal broad agreement across the political spectrum that the economic outlook has weakened since the beginning of the year,” said Joan Hsu, director of consumer surveys.
She added: “After particularly large declines in the level of confidence this month, Republican confidence is now 20 percent lower than it was in January, while Democratic confidence declined by 13 percent during the same period.”
The survey's measure of consumers' expectations about inflation over the next year rose to 4.6 percent, compared to 4 percent in August. Inflation expectations for the next twelve months jumped from 3.4 percent in February, that is, before the start of the US-Israeli war with Iran.
Consumer expectations for inflation over the next five years also rose slightly to 3.4 percent, after remaining stable at 3.3 percent for three consecutive months.
