Oman’s Duqm: why the region’s most underrated port is suddenly well-positioned

Feature | Read time: 12 minutes

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The Port of Duqm has emerged as a vital hub as the maritime trade network of West Asia experienced a fundamental reorganization in early 2026.

The closure of the Strait of Hormuz in February 2026 caused the largest disruption to seaborne trade in modern history, forcing shipping lines to activate alternative routes [1]. Sitting entirely outside this volatile waterway, the port provides direct access to the Indian Ocean, South Asia, and East Africa [2]. Years of deliberate public investment in port infrastructure, downstream energy assets, and overland road and rail connections are translating into active trade flows [4].

Reggy Vermeulen, Chief Executive Officer of the Port of Duqm Company, has observed that this shift represents a direct endorsement of the port’s long-term planning [6]. He stated that this investment demonstrates international partner trust in the Port of Duqm’s trajectory and Oman’s broader economic goals[6]. Rather than serving as a short-term crisis bypass, Duqm is establishing its position as a central component of regional trade diversification [7].

A pronounced pivot toward Asian markets and the strategic repositioning of sovereign wealth capital across the GCC drive this development [4].

Strait Instability Accelerates Gulf Bypass Corridors

The current instability in maritime chokepoints has accelerated regional efforts to establish land and sea corridors that operate independently of the Persian Gulf [10]. Terminal operators and sovereign entities are investing in infrastructure designed to secure logistics routes during prolonged disruptions [4].

For example, DP World is expanding port and freight-handling capacity on the East Coast of the United Arab Emirates to access the Gulf of Oman directly [4]. These plans include constructing a second crude oil pipeline to parallel the Habshan-Abu Dhabi line, which will double the transport capacity to 3 million barrels per day [4].

Oman’s geographic positioning outside the Persian Gulf allows its deep-water ports at Sohar, Duqm, and Salalah to absorb redirected trade volumes [2]. This capability did not emerge suddenly but represents decades of targeted spending on transport networks and special economic zones [5]. During the recent shipping crisis, Omani port authorities successfully managed the transit of hundreds of additional vessels [5]. Quantitative trade shifts demonstrate the economic value of this infrastructure [5].

Customs declarations within the green corridor established between Dubai and Oman in March 2026 escalated from 1 billion UAE Dirhams to more than 8 billion UAE Dirhams[5]. This shift moved a massive volume of cargo to Omani sea and air terminals [5].

Simultaneously, the Emirate of Sharjah launched its own logistics corridor, linking Omani ports to northern border crossings to protect supply chain continuity [5]. These developments highlight the emergence of a highly integrated regional transit network [5].

Logistics Corridor	Infrastructure Components	Financial Sizing and Metrics	Strategic Trade Outcome
Dubai-Oman Green Corridor	Omani ports and airports linked to UAE land borders	Customs declarations grew from AED 1B to over AED 8B in March 2026	Successful diversion of blocked Persian Gulf shipping
Parallel Habshan-Abu Dhabi Pipeline	Duplicated crude pipeline to Fujairah terminals	Sized to double export capacity from 1.5M to 3M bpd	Bypasses the Strait of Hormuz for UAE crude exports
Sharjah-Oman Transit Route	Land border crossings to Omani deepwater ports	Multimodal cargo trucking and customs clearing	Protects supply chain continuity for UAE manufacturing

Sources: [4], [5]

Oman-India Trade Deal Secures Energy Lanes

The entry into force of the India-Oman Comprehensive Economic Partnership Agreement on June 1, 2026, accelerates Oman’s Asia pivot [9]. While Oman represents a modest domestic market of 5.5 million people, its strategic value to India lies in its role as a gateway connecting South Asia to wider GCC and African markets [9]. The bilateral agreement establishes a highly liberalized trade framework that removes historical tariff asymmetries [12]. Under the agreement, Oman offers immediate zero-duty access on 98.08 percent of its tariff lines, covering 99.38 percent of Indian exports by value [9].

India has reciprocated by reducing or eliminating tariffs on 77.79 percent of its tariff lines, representing 94.81 percent of Omani imports by value [14]. India protects sensitive domestic sectors like dairy, cereals, and agriculture through strict exclusion lists [15]. The agreement supports the industrial competitiveness of Omani exports by simplifying trade in downstream chemicals, metals, plastics, and fertilizers [13]. For Indian exporters, the agreement removes the historical 5 percent duty on machinery, iron, steel, and textiles [13].

In the pharmaceutical sector, the agreement introduces regulatory fast-tracking, allowing generic medicines approved by major regulators to receive Omani marketing authorizations within 90 days [8]. Energy security requirements further reinforce the strategic relevance of this export corridor [9].

During the maritime blockades of early 2026, India shifted its LNG sourcing from Persian Gulf ports to Omani terminals [3]. Oman emerged as India’s largest LNG supplier during this period, accounting for 30 to 31 percent of total Indian LNG imports [3].

To build a permanent bypass, both nations are advancing the Middle East-India Deepwater Pipeline across the Arabian Sea [9]. This 4.8 billion US dollar subsea project will span 2,000 kilometers, connecting gas fields in Oman directly to the Indian state of Gujarat [9]. Furthermore, the agreement improves professional mobility to support the operation of over 6,000 active joint ventures [9].

The agreement raises the ceiling for intra-company transferees to 50 percent and establishes binding commitments for defined professional categories [9].

CEPA Provision	Impact on Indian Exporters	Impact on Omani Exporters	Strategic Integration Outcome
Tariff Elimination	Zero-duty access on 98.08% of Omani tariff lines	Zero-duty access on 77.79% of Indian tariff lines	Immediate price competitiveness for manufacturing sectors
Professional Mobility	ICT ceiling increased from 20% to 50%	Eased entry and stay conditions for healthcare and IT	Enforceable paths for technical and managerial talent
Trade Facilitation	EIC inspection and Halal certificates accepted directly	Simplified rules of origin under CAROTAR 2020	Reduced transaction costs and faster customs clearance
Energy Securement	Stable export channels for petroleum and fertilizers	Direct supply agreements for Omani LNG	Oman became India’s largest LNG supplier in early 2026

Sources: [3], [9], [16]

Sovereign Wealth Funds Anchor Localized Manufacturing

Sovereign wealth fund investments actively support the expansion of Duqm as a global industrial hub [20]. The Oman Investment Authority managed state assets worth 23 billion Omani Rials, equivalent to approximately 60 billion US dollars, in 2025 [22].

The authority divides its portfolio between the Future Generations Fund for international assets and the National Development Fund to support domestic economic diversification [23]. To attract foreign direct investment, the authority launched the Future Fund Oman in 2024 with a capital of 5.2 billion US dollars [24].

Future Fund Oman has committed 585 million US dollars alongside 458 million US dollars in local private investment to fund 105 strategic projects [25]. This sovereign capital supports industrial localization, including the Orion Solar cell facility in the Sohar Freezone [25]. It also funds the Gallant Industrial Project, which produces 66,000 tonnes of lithium iron phosphate cathode materials annually [25]. These initiatives align Omani domestic investment with broader GCC sovereign strategies [4].

The Saudi Public Investment Fund has signed a memorandum of understanding with the Oman Investment Authority to coordinate cross-border investments [26]. This partnership operates alongside the Saudi Omani Investment Company, which intends to invest up to 5 billion US dollars in Oman’s industrial sectors [26].

Karwa Motors, a strategic joint venture between Mowasalat Qatar and the Oman Investment Authority, represents a key example of regional joint investment [27]. Located on a 220,000 square meter site within the Special Economic Zone at Duqm, Karwa Motors represents the Sultanate’s first bus assembly plant [27].

The facility employs modern welding, paint, and assembly shops, using technology transfer agreements to manufacture commercial buses [27]. The factory commenced commercial operations by producing 500 buses for the 2022 FIFA World Cup and now targets up to 700 buses annually [27].

Dr. Ibrahim Albalushi, Chief Executive Officer of Karwa Motors, stated that placing the manufacturing facility at the Port of Duqm provides direct access to international shipping lines [28]. He noted that this vehicle manufacturing plant creates valuable opportunities for new small enterprises while offering Omani youth a direct path into the automotive industry [30].

OQ Infrastructure Establishes Clean Downstream Cluster

OQ, Oman’s state-owned integrated energy company, forms the industrial foundation of the Duqm zone[31]. Led by Group Chief Executive Officer Ashraf Hamed Al Mamari, OQ has executed a 10 billion US dollars investment program to develop a downstream energy cluster outside the Strait of Hormuz [31]. The primary asset in this cluster is the Duqm Refinery, known as OQ8, a joint venture between OQ and Kuwait Petroleum International [31]. With a processing capacity of 255,000 barrels of crude oil per day, OQ8 has exported over 560 product shipments since achieving commercial operations [31].

To support the refinery, OQ operates the Ras Markaz Crude Oil Storage Terminal through its subsidiary, the Oman Tank Terminal Company [31]. An 80-kilometer pipeline directly links the terminal to the Duqm Refinery, handling over 176 million barrels of crude oil [31]. Marafiq, an OQ subsidiary, provides the utility infrastructure for this downstream complex by operating a 326 MW power plant and a water desalination plant [31]. Marafiq has achieved 100 percent operational readiness, delivering over 85 GWh of electricity and 710,000 cubic meters of water [31].

Oman’s long-term energy strategy uses this industrial base to transition toward clean-fuel production [36]. The Public Authority for Special Economic Zones and Free Zones signed ten investment agreements worth 2.9 billion Omani Rials in June 2026 to expand industrial output [39]. This includes the downstream component of the ACME green hydrogen and ammonia project, representing a 4.2 billion US dollars investment [39]. ACME Group will develop phases two and three to produce 800,000 tonnes of green ammonia and 142,000 tonnes of green hydrogen annually [39].

The HYPORT Duqm project similarly uses the zone’s solar and wind resources to split water into hydrogen and oxygen, converting the output into green ammonia for export [37]. Foreign direct investment funds this transition through significant port capacity expansions [6]. Investcorp Aberdeen Infrastructure Partners has signed a cooperation agreement to invest in a 550 million US dollar infrastructure project at the Port of Duqm [6]. The expansion involves extensive dredging and the construction of a new quay wall to service a low-carbon green steel industrial plant [6].

Downstream & Green Energy Project	Location / Footprint	Financial Investment	Targeted Output & Capacity
Duqm Refinery (OQ8)	SEZAD Petrochemical Zone	Over $9 Billion	255,000 barrels of refined products per day
Ras Markaz Terminal (OTTCO)	Ras Markaz Coastline	Integrated in OQ Portfolio	26.7 million barrels total storage capacity
ACME Green Hydrogen	10 square kilometer site	$4.2 Billion	800,000 tonnes of green ammonia per year
Port of Duqm AIIP Project	Main Duqm Port Basin	$550 Million	Construction of a new quay wall and dredging
Marafiq Utility Complex	Special Economic Zone	OQ Utility Investment	326 MW power plant and 36,000 m³/day water

Sources: [6], [31], [39]

Overland Transportation Networks Speed Transit Times

GCC states are developing direct cross-border road and rail links to reduce shipping transit times [10]. The first cross-border railway project, Hafeet Rail, is a 2.5 billion US dollar joint venture between Etihad Rail, Oman Rail, and Mubadala Investment [42]. Spanning 238 kilometers, the railway connects the UAE national rail network at Al Ain directly to Sohar Port in Oman [42]. As of April 2026, civil works and major structures are 40 percent complete across key locations [42].

Eng. Abdulrahman Al Hatmi, Group CEO of Asyad Group, emphasized that this railway connection creates a fully integrated intermodal logistics network [43]. Asyad’s global expansion supports this intermodal capacity, which includes acquiring dry port assets in Uzbekistan to connect Central Asian exports directly to Omani ports [45]. Overland road infrastructure further supports this rail system, specifically the direct highway linking Saudi Arabia and Oman across the Rub’ Al Khali desert [2]. Pushing a dual highway through the shifting sands of the Empty Quarter required 1.3 million work hours and 750 pieces of heavy machinery [46].

The opening of the Ramlet Khelah border crossing has cut traveling times by 16 hours, driving a sharp increase in trade volumes [47]. The value of goods crossing the border rose from 300 million US dollars in February 2026 to 830 million US dollars in March 2026 [47]. The primary cargo consists of fertilizers, construction materials, agricultural inputs, and medicines[47]. To support this trade volume, the two nations are developing the Special Economic Zone at Al Dhahirah [2].

GCC Railway & Highway Parameter	Technical Specification / Metric Value	Logistics Significance
Hafeet Rail Total Distance	238 kilometers	Connects Omani ports to 15+ integrated hubs
Rail Freight Transport Capacity	15,000 tons / 276 TEU per trip	Low-carbon alternative to road container transport
UAE-Oman Transit Time	100 minutes (passenger services)	Integrates industrial zones of both nations
Empty Quarter Highway	725 kilometers total length	Connects Riyadh directly to Ibri in Oman
Batha Haradh Section (KSA)	564 kilometers across desert	Overcomes shifting dunes with modern engineering

Sources: [2], [42], [43], [46]

FDI Diversifies Beyond Original Chinese Investments

The Sino-Oman Industrial Park anchored the early phase of foreign investment in Duqm under a 50-year lease signed in May 2016 [49]. Master-developed by Oman Wanfang, the 12.72 square kilometer development has a planned overall investment of 10.7 billion US dollars [49]. Initial developments focused on petrochemicals, methanol production, building materials, and vehicle assembly [52]. However, the investment dynamics in Duqm have diversified significantly [54].

Chinese foreign direct investment declined relative to earlier projections during the later stages of Duqm’s development [54]. The strategic focus of the Special Economic Zone has shifted from heavy carbon-intensive refining toward clean energy, hydrogen derivatives, and digital infrastructure [54].

This shift has attracted significant capital from British, European, and Korean investors through Hydrom [37]. Despite this shift, Chinese industrial firms continue to implement targeted manufacturing projects, such as a 500 million US dollar silicon-based anode material facility signed in June 2026 [29].

Industrial Diversification Reshapes Indian Ocean Trade

The Port of Duqm’s maturation marks a fundamental shift in how the GCC secures its external trade [4]. By establishing deep-water access entirely outside the Strait of Hormuz, Oman has built an alternative trade route that continues to move cargo when maritime blockades close the Persian Gulf [2].

The structural integration of the India-Oman CEPA, cross-border rail connections, and low-carbon industrial clusters will permanently alter cargo routing patterns across the Indian Ocean[6]. Future expansion will likely focus on linking Duqm’s green hydrogen infrastructure directly to European and Asian industrial supply chains [37].

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