Oman’s economy is on the up thanks to higher oil prices. But high unemployment and the continued lackluster performance of the non-hydrocarbons sector remain fundamental problems ahead of a looming royal succession.

Omani crude prices have averaged $66.44/B for the year to date, up $15.45/B (30%) year-on-year. Government revenues are thus set for a substantial boost this year, whatever happens in the non-oil economy, and over the half of 2018 Oman’s year-on-year deficit halved (MEES, 27 July). MEES estimates a $4.38bn (1.69bn Omani Rials at the fixed exchange rate of OR1=$2.6) boost to hydrocarbon revenues this year (see table), and monthly data is already corroborating this trend: oil and gas revenues in the first half of 2018 jumped to $9.84bn from $7.42bn a year earlier.

In many respects, the return of $70/B crude prices is a boon for the sultanate. The country went from a...