State owned ratings stable if Iran conflict is brief

MUSCAT, MAR 11

The ratings of leading Omani government-related entities (GREs), notably Energy Development Oman (EDO), OQ SAOC, Oman Telecommunications Company (Omantel), Nama Electricity Distribution Company and Oman Electricity Transmission Company (OETC), are unlikely to be impacted by the current conflict involving Iran, provided the hostilities are limited in duration, according to Fitch Ratings.

The ratings agency said its assessment is based on the “strong likelihood” that the Omani government will support its key operating companies. However, the baseline expectation is that the conflict will be “short-lived”, lasting less than a month.

“Most rated corporate entities in the GCC are rated on a top-down basis and their ratings will move with the Issuer Default Rating of the relevant sovereign. However, our base case is subject to particularly high uncertainty. A more prolonged disruption to energy exports than we assume would likely have more severe negative repercussions for sovereign credit profiles in the region”, Fitch warned in its assessment issued on March 10, 2026.

Fitch said it expects publicly rated national oil companies, including EDO and OQ, to be able to absorb the impact of current disruption, given their “strong financial profiles, minimal financial leverage and access to substantial committed liquidity”.

“Our base case is that the effective closure of the Strait of Hormuz will be temporary, given its vital economic role”, Fitch explained. “Restrictions on marine traffic through the strait could, however, put pressure on regional corporates’ ability to export products or maintain supply chains in the short term. Corporates and infrastructure operators generally have adequate short-term liquidity to cover operational shortfalls, but a longer interruption may increase their reliance on sovereign support”.

Fitch assessed the Omani state-owned entities using the Standalone Credit Profile (SCP), which reflects each organisation’s intrinsic financial strength independent of state support.

EDO, which represents the government’s 60% stake in Petroleum Development Oman as well as all of the gas in Block 6, has an SCP of ‘bbb+’, reflecting strong credit fundamentals linked to its strategic role. OQ, the wholly owned integrated energy group, carries an SCP of ‘bbb-’, supported by its diversified operations across refining, petrochemicals and energy infrastructure, although balanced by exposure to commodity cycles and leverage.

In the telecommunications sector, Omantel has an SCP of ‘bbb’, reflecting solid operating performance, a strong domestic market position and regional investments. Within the power sector, both Nama Electricity Distribution Company and OETC have SCPs of ‘bb+’, reflecting stable regulated revenue frameworks but moderate financial flexibility.

Since its launch about 12 days ago, the Iran war has driven up energy prices, shipping costs and inflation risks, largely because disruptions around the Strait of Hormuz — through which roughly 20% of global oil and significant LNG flows move — have unsettled energy markets and global supply chains.