NextFin News - The Trump administration has issued a sharp ultimatum to Oman, threatening the longtime Gulf ally with aggressive economic sanctions and potential military action if it facilitates Iranian efforts to control the Strait of Hormuz. The escalation follows reports that Muscat has been in discussions with Tehran regarding a joint "tolling system" for the strategic waterway, which handles approximately 20% of global oil traffic. The move marks a dramatic shift in U.S. policy toward a nation often described as the "Switzerland of the Middle East" for its historic role as a neutral mediator.
U.S. President Trump, speaking during a cabinet meeting on Wednesday, signaled a departure from traditional diplomatic norms by suggesting the use of force against the Sultanate. "Oman will behave just like everybody else, or we’ll have to blow them up," U.S. President Trump stated, though he later added that he believed the country would ultimately comply. The rhetoric was quickly reinforced by Treasury Secretary Scott Bessent, who warned on Thursday that the U.S. would "aggressively" target any actors involved in facilitating tolls for the Strait. Bessent, a former hedge fund manager known for his fiscal hawkishness and "America First" economic alignment, emphasized that any willing partners of Iran would be penalized to ensure the free flow of commerce.
The friction centers on the Strait of Hormuz, where Iran has recently attempted to assert greater authority by proposing a maritime fee system. While Iran claims these fees are for "navigation and maritime protection services," Washington views them as illegal tolls designed to fund Tehran’s war efforts. Brian Katulis, a senior fellow at the Middle East Institute, noted that Oman’s unique position—facing Iran across the chokepoint—has historically allowed it to serve as a vital backchannel for U.S.-Iran communications. However, Katulis suggests that the current administration’s "with-us-or-against-us" posture leaves little room for Oman’s traditional neutrality, potentially dismantling decades of delicate regional balancing.
Market reaction to the heightened tension has been palpable. Brent crude prices have remained volatile, trading near $93 per barrel as of May 29, 2026, reflecting a "war premium" that has persisted since the onset of the U.S.-Israeli conflict with Iran. Analysts at Goldman Sachs have cautioned that while the administration’s rhetoric is intended as a deterrent, the threat of sanctions against a stable partner like Oman could inadvertently tighten global supply if Muscat’s port facilities or logistics hubs are caught in the crossfire. This view, however, is not yet a consensus; some energy strategists argue that Oman’s heavy reliance on U.S. security guarantees makes a full rupture unlikely, suggesting the current "outburst" is a tactical maneuver to force Muscat to abandon its dual-track diplomacy.
The diplomatic fallout extends beyond energy security. Oman has been a cornerstone of U.S. counterterrorism efforts and a frequent host for sensitive negotiations, including past nuclear talks and prisoner swaps. By threatening to "blow up" a partner that hosts U.S. military facilities, the administration risks alienating other Gulf Cooperation Council (GCC) members who rely on predictable U.S. security umbrellas. For now, Muscat has remained officially silent, though reports from the region suggest the Sultanate is scrambling to clarify its position before the Treasury Department’s "aggressive" sanctions window begins to close.
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