Oman Railway Would Improve Global Oil Security

With 35% of the world’s oil passing through the Straits of Hormuz, the new railway network in Oman will improve security of passage. Once the network is built, tankers will be able to dock on the Gulf side of the Straits and pass oil by rail inland to the Indian Ocean, avoiding security issues associated with Iran in the process.

Approximately 17 million barrels of oil passed through the Straits of Hormuz in 2011, almost five times the amount that passed through the Suez Canal that year. This is because it is economical to put oil in ships too big to transit the canal and send them east to their markets than through the congested canal.

Oman is scheduled to build its section of the GCC Railway Network in 2015, funding it through sukuk and potentially by allowing investors to buy rolling stock and lease it to the Oman National Rail Network.

The GCC Rail Network is due for completion by 2018, though insiders say that it is more likely to be finished in 2019, with delays to construction in Kuwait.