MUSCAT: Oman said Wednesday that it will open an embassy in the Palestinian territories in support of the Palestinian people, in a first for a Gulf Arab state.

The announcement coincided with a US-led economic workshop in Bahrain to unveil a Middle East peace plan which is not expected to recognise an independent Palestinian state.

"In continuation of Oman's support for the Palestinian people, the Sultanate of Oman has decided to open a diplomatic mission at the level of embassy in the State of Palestine," the foreign ministry said on Twitter.

A delegation from the ministry will travel to Ramallah, the seat of the Palestinian Authority, to take the necessary measures to open the embassy, it said.

The announcement was cautiously welcomed by a senior Palestinian official.

"We think maybe first of all it will help us educate the Omani government as to the real nature of the occupation and also working with Palestine directly," Hanan Ashrawi told journalists.

But she warned Oman against using the new embassy as a step towards establishing formal relations with Israel.

"If this has a political price attached then certainly there will be ramifications," she said.

In Muscat, the Palestinian ambassador to Oman said the opening of an embassy in Ramallah was a "historical decision".

"It is an important and indicative step with profound implications, especially at this time, as the Palestinian issue passes through a critical stage," Tayseer Farhat told AFP.

"This step represents political and moral support."

Egypt and Jordan are the only Arab countries to have established diplomatic ties with the Jewish state.

But Oman was the first Gulf state to receive Israeli Prime Minister Benjamin Netanyahu in October 2018.

A US ally bordering Saudi Arabia and Yemen, Oman has frequently served as a mediator in the Arab world.

- Diplomatic role -

Elizabeth Dickinson, senior analyst with the International Crisis Group think tank, believes the step by Oman will enhance its diplomatic role.

"The good offices of Omani diplomacy have averted regional crises in the past and would be welcome in the Israel-Palestine context," Dickinson told AFP.

"Muscat is one of the few remaining regional powers that can truly talk to all sides -- a vitally important role in a moment of such heightened regional tension," she said.

Oman is not participating in the Bahrain workshop, where US President Donald Trump's administration hopes to raise $50 billion of investments to improve the economic conditions of Palestinians.

The conference is boycotted by the Palestinian Authority, which fears the US administration is dangling money to impose pro-Israeli political solutions.

Jared Kushner, Trump's son-in-law and adviser, is leading the "Peace to Prosperity" initiative which he called the "Opportunity of the Century" for the Palestinians.

But Kushner, a staunch supporter of Israel, said the Palestinians needed to accept the economic framework before any eventual progress on reaching a long-elusive comprehensive peace deal.

Last year, Oman's state minister for foreign affairs, Yusuf bin Alawi bin Abdullah, held talks with Palestinian president Mahmud Abbas in Ramallah.

He also made a rare visit by an Arab official to the flashpoint Al-Aqsa mosque complex in Israeli-annexed east Jerusalem.

"Now Oman will have a direct presence in Ramallah. Muscat has an uncanny ability to see a middle road when most others are picking sides," Dickinson said.

Muscat has previously mediated in regional disputes including US-Iranian tensions and in the conflict in Yemen. —AFP