Oman is an Islamic state. The majority of people in Oman are Muslims. Most of them are of the Ibadi sect, followers of Abd Allah ibn Ibad. This sector is closely followed by Sunni Muslims. The Shi'a minority live along Al Batinah and Muscat coasts. This minority includes the Al-Lawatis, the Bahranis of Bahrain descent, and the Ajam, of vague origin but generally considered to originate in Iran.

Many people think that Ibadism is an outgrowth of the Kharijites movement, a variant form of Islam practiced by descendants of a sect that seceded from the principal Muslim body after the death of the Prophet Muhammad in 632. Ibadies, however, deney this notion considering themselves ougrowthing from the famous follower (tabe'e) Jabir bin Zaid. Ibadies reject primogeniture succession of the Quraysh, the tribe of Muhammad, and assert that leadership of Islam, the caliphate, should be designated by an imam elected by the community from candidates who possess spiritual and personal qualities. Ibadhi leadership is vested in an imam, who is regarded as the sole legitimate leader and combines religious and political authority. The imam is elected by a council of prominent laymen or shaykhs. Adherence to Ibadism accounts in part for Oman's historical isolation. Ibadis were not inclined to integrate with their neighbours, as the majority of Sunni Muslims regard Ibadism as a heretical form of Islam.

The Sultan Qaboos Grand Mosque is the largest Mosque in Oman and one of the largest in the world.

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