LowIV Macro Policy & Sovereign Debt15 September 2026, Tuesday
Oman's first-half budget deficit narrows to 17 million rials, while fuel support reaches 162 million rials, 4.6 times the annual allocation
Assuming an oil price of 81 dollars, the Central Bank of Oman projects a budget surplus of 2.5% of GDP in 2026 and a fall in the debt ratio to 32%.
According to an Oman Observer report dated 15 September, Oman recorded revenue of 6.602 billion rials and expenditure of 6.619 billion rials in the first half of 2026. The budget deficit narrowed to 17 million rials from 259 million rials in the same period of 2025. The realised average oil price was 74 dollars, rather than the 60 dollars assumed in the budget. However, because pump prices were frozen, fuel support rose from 17 million rials at the end of March to 162 million rials at the end of June. This figure is about 4.6 times the 35 million rials allocated for the whole year. The central bank projection reported by Muscat Daily on 14 September forecasts a surplus of 2.5% of GDP for 2026.
According to the central bank, public debt as a share of GDP will fall from 34.6% in 2025 to 32% in 2026 and 27.8% in 2030. The current account will also swing from a deficit of 1.2% to a surplus of about 4%. This picture shows the fiscal relief that the war-driven rise in oil prices in the Gulf is providing to producers. On the other hand, fixed fuel prices are rapidly swelling the subsidy bill and eroding part of the gain. Debt reduction, which is positive for the credit rating, could become fragile at the 70–73 dollar price level projected for 2027–2030.
Talay assessment
Bottom line
War-driven oil price gains have almost closed Oman's budget deficit, and the central bank projects a 2026 surplus of 2.5% of GDP and a falling debt ratio. Fuel support, however, has risen to 4.6 times its annual allocation because pump prices are frozen, eroding part of the windfall. The most likely path is a surplus by year-end that nonetheless comes in below the projection because of the subsidy burden; the 70–73 dollar price assumed for 2027–2030 makes debt reduction fragile.
Likely effects
- Oman public financesPositive1–6 months
Oil averaging 74 dollars against a budgeted 60 dollars cut the deficit from 259 million rials to 17 million rials. The expected fall in the debt ratio from 34.6% to 32% is positive for the credit rating outlook.
- Fuel subsidy burdenNegativeWeeks
Frozen pump prices pushed fuel support to 162 million rials by end-June. While high oil prices persist this item keeps growing, eroding the surplus and forcing the government to choose between price adjustment and fiscal discipline.
Possibilities, ranked
- 1Surplus achieved but below projection75%
High oil revenue lifts the budget into surplus, but growing fuel support keeps it below the 2.5% projection.
Watch: Third-quarter budget data and the fuel support total as of end-September.
- 2Surplus vanishes as prices fall15%
Oil prices fall well below the 81 dollar assumption while the subsidy burden persists; the budget returns to balance or a small deficit by year-end.
Watch: Oil prices dropping below the central bank assumption and the nine-month budget balance turning to deficit.
- 3Pump price adjustment10%
The government partly liberalises or raises fuel prices to contain the subsidy bill.
Watch: An official announcement of higher monthly fuel prices in Oman.
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.