Since 1970, Oman has pursued a moderate foreign policy and expanded its diplomatic relations dramatically. It supported the 1979 Camp David accords and was one of three Arab League states, along with Somalia and Sudan, which did not break relations with Egypt after the signing of the Egyptian-Israeli Peace Treaty in 1979. During the Iran-Iraq war, Oman maintained diplomatic relations with both sides while strongly backing UN Security Council resolutions calling for an end to the war. Oman has developed close ties to its neighbors; it joined the six-member Gulf Cooperation Council when it was established in 1980.

Oman has traditionally supported Middle East peace initiatives, as it did those in 1983. In April 1994, Oman hosted the plenary meeting of the Water Working Group of the peace process, the first Gulf state to do so. From 1996-2000, Oman and Israel exchanged trade offices. Oman closed the Israeli Trade Office in October 2000 in the wake of public demonstrations against Israel at the start of the second intifada.

During the Cold War period, Oman avoided relations with communist countries because of the communist support for the insurgency in Dhofar. In recent years, Oman has undertaken diplomatic initiatives in the Central Asian republics, particularly in Kazakhstan, where it is involved in a joint oil pipeline project. In addition, Oman maintains good relations with Iran, and the two countries regularly exchange delegations. Oman is an active member in international and regional organizations, notably the Arab League and the GCC.