S&P said the action "reflects our view that the current social unrest in the country and the possible repercussions of regional conflicts could increase political risks in Oman, which might eventually also negatively affect economic growth and public finances.
"As recent events in the region have shown, political risk from popular discontent can mount very quickly and can undermine political stability," it said in a statement.
"If tensions were to escalate in Oman, it could lead to Oman's ratings being lowered within the next three months.
"Similarly, if the government's fiscal response to political pressures were to undermine Oman's comparatively strong public finances, or if exports of Oman's oil or gas products were to be affected, Oman's external position could weaken and the ratings could be lowered.
"On the other hand, if the government is able to address public grievances without putting too much burden on public finances and external investor confidence, then we believe the ratings could stabilise at the current levels."
Popular unrest in Tunisia and Egypt forced their longstanding, autocratic leaders to stand down earlier this year while Libya appears to be sinking into civil war following protests there against Moamer Khadafi's 41-year rule.
There have been protests elsewhere too, demanding change and democratic reforms, and on Monday Omani protesters demanding a clampdown on corruption in the Gulf state maintained vigils despite the sacking of two ministers and pledges to create jobs.
Protesters in the normally placid sultanate insist that their demands are confined to reform and a crackdown on corruption, without challenging the legitimacy of Sultan Qaboos, who has ruled Oman for four decades.
S&P said its action covered Oman's 'A/A-1' long-term and short-term local and foreign currency ratings which were put on CreditWatch with negative implications.