Kuwait and Oman each recorded GDP growth of between 2.6 and 2.9 per cent over the most recently measured period, according to regional economic data compiled by international financial institutions. While the growth rates lag the headline figures posted by the UAE and Saudi Arabia, they represent solid and broadly stable economic performance for two GCC member states that are navigating their own distinct diversification trajectories with fewer resources than their larger neighbours.
The performance of the GCC’s smaller economies — a grouping that also includes Bahrain — is an often-underreported dimension of the Gulf’s economic story. Together, Kuwait, Oman, and Bahrain represent a combined GDP that is substantial in absolute terms, and their diversification programmes, though less publicised than Saudi Arabia’s Vision 2030 or the UAE’s D33 agenda, are generating meaningful structural change in their respective economic bases.
Kuwait: Fuel Reserves and Resilience Planning
Kuwait has responded to the regional disruption caused by the near-closure of the Strait of Hormuz with an accelerated programme of strategic fuel reserve expansion, emergency logistics coordination, and regional energy cooperation initiatives. The Kuwait Petroleum Corporation has been reviewing additional storage and export contingency measures that would give the country greater operational flexibility if Hormuz transit remains constrained for an extended period.
On the clean energy front, Kuwait is pushing ahead with its 22-gigawatt renewable energy target for 2030 through a programme of utility-scale solar independent power projects. Phase III of the solar IPP programme covers 1,100 megawatts and 500 megawatts of capacity across separate developments, with the projects designed to reduce Kuwait’s domestic consumption of crude oil for power generation — currently among the highest per-capita rates globally — and free up more oil for export at higher international prices.
Oman: Hydrogen Pioneer Among GCC States
Oman has carved out a distinctive position in the GCC’s energy transition story as the region’s most advanced developer of utility-scale solar combined with battery storage, and as the Gulf state furthest advanced in building a green hydrogen export value chain. The Ibri III project — 500 megawatts of solar generation paired with 100 megawatt-hours of battery storage — demonstrates the kind of dispatchable renewable generation that allows grid operators to manage the intermittency challenge that pure solar plants cannot address.
Oman’s Hydrom platform is coordinating green hydrogen project development across the country, with projects designed to leverage Oman’s existing LNG export infrastructure for future green hydrogen and ammonia exports. The country’s geographic position — with coastline on both the Arabian Sea and the Gulf of Oman — gives it natural advantages as a maritime energy export hub that could serve European and Asian buyers simultaneously as green hydrogen trade routes develop over the next decade.
GCC Railway: A Shared Infrastructure Vision
Both Kuwait and Oman are participants in the broader GCC-wide coordination on transportation infrastructure, including the long-discussed Gulf Railway project that would eventually connect all six member states by rail. Progress on the railway has been uneven, with individual country segments advancing at different rates, but the geopolitical disruption of 2025-2026 has added urgency to the case for overland connectivity that reduces dependence on Hormuz-transiting shipping for both energy and non-energy trade.
For Oman in particular, enhanced connectivity with Saudi Arabia and the UAE through both road and potential rail links would significantly amplify the economic multiplier effect of investments in the Duqm economic zone and the Salalah free zone — two major non-oil development anchors that the Omani government has identified as central to its long-term economic transformation.
Investment Outlook
For investors assessing the smaller GCC economies, Kuwait and Oman offer different but complementary opportunities. Kuwait’s enormous sovereign wealth fund — the Kuwait Investment Authority, one of the world’s largest — provides a deep capital backstop that gives the government the fiscal capacity to continue investing in diversification even during periods of lower oil prices. Oman, which completed a significant fiscal adjustment programme over 2021 to 2024, has emerged with a leaner and more transparent public finance structure that has improved its credit profile and its attractiveness as a destination for foreign direct investment in infrastructure, logistics, and clean energy.
