Oman has requested Iranian car manufacturer Khodro to open an assembly plant in Duqm, following a meeting between Yahya al-Jaberi, manager of Duqm Special Economic Zone (Sezad) and Iran Khodro Industrial Group.
The CEO of Khodro, Hashem Yekeezare, welcomed the plan as a way for Khodro to access east and north African markets.
The suggested $100m plant, with capacity to assemble 15,000 to 20,000 cars a year, may get support from an Omani public investment fund.
Khodro is aiming to produce 3 million cars a year, up from around 800,000 a year in 2011 before sanctions stifled Irans industrial sector.
Iran and Oman are reviving economic ties after Muscat was instrumental in negotiations towards a nuclear deal.
Both countries are looking to attract foreign direct investment to diversify their economies away from hydrocarbons.