US President Donald Trump's recent tariff-related decisions have unleashed a wave of economic and political impacts for developed and emerging countries alike. These decisions have negative repercussions on global oil markets, leading to a decline in revenues for countries that rely on exports of this commodity as a primary source of national income.

 

Globally, average global oil prices fell to $73 per barrel during the first quarter of this year, down from $83 per barrel during the same period last year. This poses a challenge for many oil-producing countries, including the Sultanate of Oman.

 

According to recent analysis, Omani oil export revenues fell by approximately RO 200 million. A part of this decline was offset by an increase in tax revenues from RO 27 million during the corresponding quarter in 2024 to RO 72 million this year, thanks to improved tax collection. However, the current second quarter is expected to be more difficult, with the average oil price expected to fall to $66 per barrel.

 

Everyone knows that the Omani government seeks to diversify sources of income and develop alternative economic sources to oil, while simultaneously committing to repaying its external debt, which amounted to approximately 14.3 billion Omani riyals by the end of the first quarter of this year, 2025, compared to approximately 15.1 billion Omani riyals by the end of the same period in 2024. The Sultanate of Oman is committed to repaying its public debt, which amounts to approximately RO 2.5 billion annually. This represents a significant burden on the state budget, which is affected by the decline in global oil prices.

 

According to the financial data report, Oman's public revenues decreased by approximately 7 per cent by the end of the first quarter of this year, recording approximately RO 2.635 billion, compared to RO 2.826 billion during the same period last year, due to the decline in global oil prices. Net oil revenues constitute a major item in the country's financial budget, along with gas revenues and followed by non-oil revenues. The government works to manage the country's various financial obligations related to the economic and social spheres each year.

 

At the same time, the government is working diligently to reduce the country's public debt to an appropriate level relative to the gross domestic product. This helps the country improve its credit rating, which has become highly valued by international financial institutions. This also helps attract more foreign investment, especially as the country is now approaching the list of global investment-attracting countries. Indeed, the Sultanate has succeeded in attracting investments over the past years, which has contributed to the improvement of the country's financial, economic, and social conditions.

 

As is well known, the decline in oil prices for oil exporting countries has a direct and significant impact on their public budgets. This leads to difficulties in their ability to meet financial obligations, both internally and externally, due to their economies' heavy reliance on oil revenues.

 

In Oman, it has negative repercussions on the fiscal budget, as oil constitutes more than 65-70% of government revenues. Any decline in prices directly leads to a decline in revenues, causing a budget deficit. This forces the government to cover the deficit through borrowing or drawing from reserves. It also results in the postponement or reduction of development projects and a slowdown in the growth of the non-oil economy.

 

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