Oman is currently in the middle of a military modernization phase, with an aim to keep pace with its neighbors such as the UAE and Bahrain. Assisted by oil revenues, the Middle East has been an attractive market for defense suppliers during the past four years and is expected to remain so to 2018.

One of the main factors driving the Omani defense budget is the arms race with countries such as Syria, Iraq, and Yemen, combined with a perceived threat from Iran. To be on par with its neighbors, Oman increased its military budget sharply over the last couple of years to value US$9.3 billion in 2013, registering a growth rate of 23.10% since 2009.

The sharp rise in the defense budget in 2012-2013 was made possible by increasing oil prices, which generated additional revenue for the government and was directed towards strengthening its defense and security. By 2018 the country’s defense and security expenditure is estimated to grow at a compound annual growth rate CAGR of 6.76% to reach US$13 billion by 2018, owing to the procurement of advanced military equipment and regional dynamics.