Oman protects the Houthis while benefiting from the American alliance. Analysis of the geopolitical and economic implications.
The Sultanate of Oman is home to leaders of the Houthi armed group, recognized as a terrorist organization by the United States. This group, supported by Iran, targets ships in the Red Sea and threatens regional stability. Muscat, while receiving US military aid, facilitates the group’s activity through logistical and financial corridors. The United States has tolerated this ambiguity for years. But with tensions rising in the Middle East, pressure is growing for Washington to impose targeted sanctions against Omani support for the Houthis. This situation highlights the contradictions of American diplomacy and the fragility of the regional security system.
Oman, diplomatic refuge for the Houthis: geopolitical issues
For several years, Oman has been hosting the political representatives of the Houthis, notably Mohammed Abdul Salam, the movement’s chief negotiator. These representatives move freely in Muscat, under state protection. Officially, Oman justifies this presence by its role as regional mediator. However, no concrete progress has been noted in the Yemeni peace talks via this channel.
The Houthis are not a marginal player. They have an arsenal of ballistic missiles and drones, supplied and supervised by Iran. They have targeted American and Israeli buildings in the context of regional tensions, particularly in 2021 and 2024. This offensive posture belies any will to negotiate in earnest.
Oman benefits from a strategic position at the crossroads of the Gulf of Aden and the Strait of Hormuz, but this dual diplomacy undermines its credibility. While the Sultanate participates in US diplomatic initiatives, it continues to host a political structure hostile to its partners.
By comparison, other Gulf countries such as the United Arab Emirates and Kuwait refuse to offer such refuge to paramilitary groups. The Omani ambiguity maintains a climate of security instability in the region. This generates a political tolerance that favors the extension of Iranian networks in the Arabian Peninsula.
Arms trade, military agreements and security dependence
Oman receives massive arms shipments from the United States. By 2022, the cumulative volume of US military sales to the Sultanate amounted to USD 3.5 billion, or approximately EUR 3.2 billion. These sales include surveillance aircraft, military electronics, ammunition and radar systems. From 2016 to 2022, USD 613 million (EUR 560 million) of equipment was exported via Direct Commercial Sales (DCS).
In return, the Sultanate guarantees strategic access to its ports and airports for US military operations. However, this logistical cooperation is not accompanied by any political constraints on Muscat’s choices regarding the Houthis.
The paradox is clear: the United States is indirectly financing a country that is hosting agents of a terrorist entity designated by Washington itself. This contradiction weakens the clarity of American diplomacy in the region. It also sends a negative signal to its traditional allies.
Analysis of arms flows shows that the United States exports an average of 450 to 600 million USD to Oman each year, which represents about 1.6% of its total military sales to the Middle East. The economic weight of these sales does not justify a policy of lasting complacency.
The Omani logistics and financial corridor at the service of the Houthis
Since 2015, UN investigations and customs seizures in Yemen have provided evidence of the use of Omani territory for the transit of arms and sensitive goods. In 2017, Iranian UAVs entered Yemen via Oman. In 2018, Burkan-2H missiles, with an estimated range of 800 km, crossed the borders by land. More recently, in 2023, seizures at the Sarfayt border post uncovered electronic warfare and drone support equipment.
Oman also constitutes a banking platform for indirect support to the Houthis. The country’s financial institutions operate in the international financial system, notably via banking correspondents denominated in dollars. This system allows Houthi figures in Muscat to transfer funds, without major blockages, including in foreign currencies.
The United States, in partially sanctioning Hezbollah and the Iranian Revolutionary Guards, has nevertheless left this Omani channel largely intact. This demonstrates a structural regulatory flaw in the system for combating the financing of terrorism.
The scale of these channels remains difficult to quantify, but several analysts estimate that more than 150 million USD per year, including gold, cash and military components, transit via Omani vectors to northern Yemen. These figures exceed the official aid paid to the reconstruction of Yemen by certain European countries.
The security and commercial consequences of Omani support for the Houthis
The repeated attacks by the Houthis in the Red Sea have immediate repercussions on international maritime trade. The Bab el-Mandeb corridor, which accounts for 12% of world maritime trade, has seen its traffic drastically reduced since the end of 2023. The companies Maersk, MSC, CMA CGM and Hapag-Lloyd have rerouted their ships, preferring to circumnavigate Africa via the Cape of Good Hope. This increases transit time by 12 to 15 days and global logistics costs by 20 to 30%.
In January 2024, Houthi attacks caused a 40% drop in the weekly passage of ships in this area, according to Lloyd’s List Intelligence. The price of containerized freight between Asia and Europe jumped by more than 80% in two months, causing a general increase in consumer prices.
Oman’s responsibility in this domino effect is therefore indirect but real. By tolerating the presence of operational Houthi relays on its soil, the Sultanate is participating in a conflictual regional environment whose economic consequences are spreading as far as European ports.
This situation also illustrates the weakness of American deterrence mechanisms against so-called partner states that are politically ambiguous. Without coercive action, the logistical corridors will continue to supply armed groups in a climate of impunity.
What strategic responses are available to the United States?
The Trump administration’s designation of the Houthis as a foreign terrorist organization (FTO) provides a legal basis for sanctioning the Omani individuals and entities involved in supporting them. Imposing targeted sanctions on banks, transport companies or individuals linked to the Houthi network in Muscat would create tangible diplomatic leverage.
Experts also recommend reviewing defense agreements with Oman, making arms deliveries conditional on effective cooperation against Houthi activities. The partial suspension of military sales or the implementation of restrictive clauses could rebalance the balance of power.
It is also possible to multilateralize diplomatic pressure, involving partners such as the European Union or Australia in coordinated measures. This framework would make it possible to avoid diplomatic isolation of Washington while strengthening the credibility of the anti-terrorist mechanism.
Finally, a total breakdown of strategic relations with Oman would be a radical measure, but it cannot be ruled out if Muscat’s double-dealing persists. The security, logistical and political costs of indirect support for the Houthis are now too great to be ignored.
War Wings Daily is an independant magazine.