Oman less exposed to Hormuz blockage, say Moody’s and S&P

MUSCAT: Oman’s strategic location outside the Arabian Gulf and the Strait of Hormuz — currently the focal point of hostilities between Iran and Western powers allied with Israel — is expected to leave it relatively better positioned than its GCC peers in maintaining largely uninterrupted energy and commodity exports, according to leading international ratings agencies.
Moody's Ratings, in commentary on the geopolitical risks facing the wider region, noted: “Oman, which does not rely on the Strait for its exports, could benefit from elevated prices and uninterrupted shipping”.
S&P Global Ratings, in a separate bulletin assessing regional vulnerability to supply-chain disruptions, stated: “Oman's export facilities in Suhar, on the Sea of Oman and Al Duqm, on the Arabian Sea coast, avoid the Strait of Hormuz entirely and although related infrastructure has been hit by Iran, we view Oman as less exposed to the risk of its blockage. Its container facilities could serve as alternatives to Gulf ports and support regional trade routes, potentially strengthening its external position and boosting growth”.
Moody’s cautioned that the “duration of energy disruption and instability will determine the credit effects of the Iran conflict”.
The agency observed that while core energy infrastructure has not been directly targeted, marine traffic through the Strait of Hormuz has slowed to near standstill levels as insurers withdraw coverage and shipping operators avoid the area amidst ongoing hostilities. Several Middle Eastern ports have suspended operations following Iranian strikes on regional infrastructure and large parts of the region’s airspace remain closed or heavily restricted.

According to Moody’s, the overall credit outlook depends largely on whether any disruption to the Strait proves temporary and whether alternative arrangements can preserve energy availability. In the near term, oil stored outside the Gulf — including cargoes held in offshore tankers that departed before the strikes — provides a buffer similar to that used after the 2019 attacks on Saudi oil facilities, helping to avert significant export losses at the time. The planned 206,000-barrel-per-day production increase by OPEC+ from April offers additional, though limited, mitigation, it noted.
“Our baseline scenario is that the conflict is relatively short-lived, likely a matter of weeks and that navigation through the Strait of Hormuz will then resume at scale. This scenario is unlikely to result in meaningful credit impact on the issuers we rate”, Moody’s said.
However, it warned that any prolonged disruption would likely trigger a sustained rise in oil prices, deepen global risk aversion and widen credit spreads across high-yield markets. Such a scenario would heighten refinancing risks for issuers with near-term maturities, particularly in energy-intensive and cyclical industries already facing elevated input costs.
S&P similarly warned that the effective closure of the Strait could transmit credit stress across multiple sectors. Shipping companies are already cancelling voyages in response to threats from Iranian naval forces and surging insurance premiums.
The agency added that the severity and duration of the conflict will determine the scale of the fallout, but key transmission channels include trade and supply chains — especially in the energy sector — energy prices and export volumes, particularly to Asia, capital flows, tourism and potential population movements.
S&P further cautioned that borrowing costs are likely to rise sharply in the near term, increasing risks for issuers with significant or imminent refinancing needs.