Oman praised Bahrain’s decision to establish diplomatic relations with Israel, becoming the second Gulf Arab state to normalise such ties after the UAE.
The sultanate said it expected the move to be a step towards building Palestinian-Israeli peace.
"We hope this new strategic path taken by some Arab countries will contribute to bringing about a peace based on an end to the Israeli occupation of Palestinian lands and on establishing an independent Palestinian state with East Jerusalem as its capital," the government said on Sunday.
Oman has long played a quiet role in fostering negotiations between Israel and the Palestinians and has expressed the need for a Palestinian state while also acknowledging a need for an Israeli state.
Bahrain's Minister of Foreign Affairs Abdullatif Al Zayani and his Israeli counterpart Gabi Ashkenazi spoke by phone on Saturday, a day after the decision to normalise relations was announced. They emphasised the need to move relations forward to promote peace and stability in the region, Bahrain's foreign ministry said.
The UAE and Israel agreed to normalise relations last month, reshaping Middle East politics from the Palestinian issue to the fight against Iran.
The agreement, known as the Abraham Accord, was announced after a phone conversation between US President Donald Trump, Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, and Israeli Prime Minister Benjamin Netanyahu.
The UAE agreed to establish diplomatic relations with Israel in exchange for the suspension of Israel's plan to annex large parts of Palestinian territory in the West Bank.
Israel's intelligence minister said at the time that Oman could be the next Arab state to formalise ties with the country, but the sultanate has yet to comment on the matter.
Mr Netanyahu made a historic visit to Oman in 2018 and held talks with Sultan Qaboos bin Said in the first such meeting in more than 20 years.
The late ruler invited Mr Netanyahu to visit after lengthy communications.
Oman, which sits on the south-eastern tip of the Arabian Peninsula, with Saudi Arabia on its eastern border and Iran to the north, has a long record of being a quiet broker in the region, opting to stay on the sidelines of the rivalry between the two regional powers.