“Oman will behave just like everybody else, or we’ll have to blow them up,” President Donald Trump declared Wednesday.
An apparently shocking statement about a nation long regarded as a key US ally.
But as a tentative deal to end the war with Iran appears to be within reach, Washington has grown increasingly frustrated by the Gulf sultanate’s quiet yet significant support for the Islamic Republic.
Located directly across the Strait of Hormuz from Iran, Oman was once viewed as a trusted intermediary between the United States and the Tehran regime.
Washington considers Muscat a strategic partner and maintains access to the sultanate’s naval facilities; a longstanding US-Oman free trade agreement meant trade in US goods and services trade totaling $4.3 billion in 2024.
However, Oman is becoming a hub for Iranian sanctions evasion.
Despite being struck by Iranian missiles and drones early in the war, Oman was the first government to congratulate the regime’s new supreme leader, Mojtaba Khamenei, on his appointment.
Iranian sources claim the Sultan of Oman recently signed a decree to expand trade and economic ties with Tehran, and suggested that banks in Muscat may even be firing managers who are reluctant to help facilitate that agreement.
The United States is aware of Oman’s support for Iran — but it hasn’t yet moved to stop it, sending instead a set of letters warning of potential sanctions as part of the Treasury Department’s “Operation Economic Fury.”
And since then — in the absence of any sanctions targeting the banks that received warnings — Oman upped the ante.
The sultanate reportedly began discussing with Iran a plan to jointly establish a permanent toll or tax system for ships transiting the Strait of Hormuz.
This critical chokepoint is barely 21 miles at its narrowest point, with shipping lanes squeezed into a corridor just a few miles wide and split between Oman and Iran.
Tehran can’t control the waterway alone — but neither can it and Oman be allowed to slap a price tag on one of the world’s busiest maritime routes.
That’s why, on Wednesday, Trump issued his blunt threat to Oman.
Later that evening, the United States sanctioned Iran’s newly formed Persian Gulf Strait Authority, which the regime set up to collect those tolls.
And on Thursday, Treasury Secretary Scott Bessent warned that “Oman, in particular, should know that the US Treasury will aggressively target any actors involved — directly or indirectly — in facilitating tolls for the Strait, and any willing partners will be penalized.”
Bessent later said he had spoken with the Omani ambassador, who “assured” him that “there were no plans for tolling the strait.”
Still, Oman has neither publicly confirmed nor denied working with or supporting Iran’s PGSA — and has not commented on Iran’s suggested “environmental tax” scheme for Hormuz shipping.
Meanwhile, evidence is growing that Oman is welcoming Iranian smugglers and helping them get around the US blockade.
Across social media, shipping accounts based in Iran advertise routes via ports in the Musandam Peninsula at Oman’s northern tip, posting videos of small cargo boats moving through the port of Khasab before crossing the Persian Gulf to Bandar Abbas in Iran.
These boats are difficult to detect, but can carry anything from benign goods like produce and cigarettes to dual-use items like the electronic components Iran needs to rebuild and rearm.
And Iranian banks sanctioned by the United States for financing terrorism — including Bank Melli and Bank Saderat — remain operational in Oman to this day.
They help the regime move funds and bypass western sanctions, with the Omani government turning at least a blind eye.
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A year ago Iran’s central bank governor even discussed the idea of establishing a joint bank with Oman to “increase banking and trade exchanges.”
While posing as a friend, Oman is acting like an enemy.
But Trump doesn’t need to bomb the country — at least not yet.
Instead, he should leverage America’s vast sanctions toolkit to target Oman’s financial system.
Bessent should sanction the Omani banks already identified as supporting Iranian sanctions evasion.
He should push the sultanate to shut down the informal money exchange houses, or hawalas, that swap Iranian rials into US dollars, and present Muscat with a pre-determined list of strategically significant financial targets that the United States commits to sanction should Oman keep supporting Iran.
Oman’s historical ties with the United States cannot excuse its support for the world’s leading state sponsor of terrorism — and Trump doesn’t need explosives to make that point.
He just needs to show that “economic fury” is what’s in store for both the terror regime in Tehran and all who facilitate its aggression.
Ahmad Sharawi is a senior research analyst at the Foundation for Defense of Democracies , where Max Meizlish is a research fellow in the Center on Economic and Financial Power.
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