Oman, Iran trade and economic ties on an upswing

MUSCAT: Trade and economic ties between the Sultanate of Oman and the Islamic Republic of Iran have burgeoned in recent years as both countries leverage their geographical proximity, historical ties and strong neighbourly relations to boost commerce to support the diversification of their economies. Of late, these ties have expanded in scope to include shipping and logistics, multimodal transportation, energy cooperation, tourism and people movement as well.

Data shared recently by the National Centre for Statistics and Information (NCSI) indicates that Omani exports to Iran have been expanding by leaps and bounds, although Oman-origin merchandise remains minuscule. It amounted to RO 207.4 million in 2022, which included a barely discernible RO 4.2 million in Omani origin goods. Nevertheless, the figures were a testament to a progressive uptick in trade between the two countries.

Re-exports into Iran from Oman included machinery, devices and equipment for heat treatment, plates, sheets, tapes, diesel engine lubricants, optical tools, equipment for medical examination and electrical equipment.

Imports from Iran into Oman amounted to RO 113.4 million in 2022, compared to RO 98.7 million in 2021. They comprised mainly livestock and semi-finished products of iron steel and bitumen, as well as fruits and shrimp.

Significantly, it was during the recent pandemic that bilateral trade, notably in the area of foodstuff, livestock and farm produce, received a major boost between Oman and Iran when conventional modes of supply together with supply chains were disrupted in the wake of international lockdowns. During this challenging period, Iran – with its abundance of fresh produce – became a practical and cost-competitive source of supply to the Omani market. Satellite ports along the Sea of Oman coast flourished in its wake, helping ensure that the food requirements of Oman were adequately met.

Since the start of 2023, both countries have exchanged high-level visits designed to set the ground for a significant uptick in trade and economic relations. Notable have been efforts to broaden transportation ties between the two neighbours for commercial and touristic purposes through various methods, including rail, road, air, and maritime routes.

To this end, Oman’s Eng Said bin Hamoud al Maawali, Minister of Transport, Communications and Information Technology, led a delegation to Tehran to meet with Iranian Minister of Roads and Urban Development Mehrdad Bazrpash earlier this month. Both sides explored the feasibility of a comprehensive maritime transport agreement envisioning direct shipping lines between the ports of Iran and Oman, particularly between Bandar Abbas and Shinas Port.

The two countries also discussed plans to facilitate trade through multimodal transit channels from Central Asia to Oman through Iran under the Ashgabat Agreement. Signed in 2011, the Ashgabat Agreement is a multimodal transport deal among Kazakhstan, Uzbekistan, Turkmenistan, Iran, India, Pakistan, and Oman for creating an international transport and transit corridor in order to facilitate the transportation of goods between Central Asia and the Arabian Gulf. The agreement came into force in April 2016.

Further, with the goal of boosting trade and economic ties, Oman and Iran are eager to sign a landmark Preferential Trade Agreement (PTA) against the backdrop of His Majesty Sultan Haitham bin Tarik’s historic visit to Tehran starting Sunday, May 28, 2023. Helping pave the way for this groundbreaking pact was the recent visit of Omani Minister of Commerce, Industry and Investment Promotion Qais bin Mohammed al Yousef. This eagerness to ramp up trade and economic relations was also reflected in the attendance of around 200 Omani business leaders at Iran Expo 2023.

Significantly, Oman’s private sector has also committed to setting up a sales agency for Iran Khodro Industrial Group (IKCO), makers of the popular Iran Khodro brand of vehicles, in the Sultanate of Oman. The facility will support the export of the Iranian automotive brand into Oman and elsewhere in the GCC.

More than 1,300 wholly-owned Iranian businesses operate in the Sultanate of Oman – a figure that is expected to rise dramatically in the wake of His Majesty the Sultan’s landmark visit to Tehran.