Oman said on Tuesday that an unusually powerful cyclone in the Arabian Sea had begun to hit its eastern coastal areas with winds of up to 260 kmh (160 mph) per hour and waves as high as 12 metres (yards).

'It is expected to increase in the coming few hours accompanied by thunder storms and heavy rain falls as the cyclone crosses the sultanate,' the official news agency of the non-Opec oil-exporter said, quoting the police.

Tropical Cyclone Gonu, which earlier reached the equivalent of a maximum-force Category Five hurricane, helped drive oil prices up more than $1 on Monday on fears it would cut exports or disrupt Gulf shipments, which make up a fifth of the world's crude.

The weather centre of the neighbouring United Arab Emirates, an Opec oil exporter, said the cyclone was expected to bring rain on Wednesday with clouds emerging over its eastern coast.

'We are following up this cyclone closely through satellite images ... there will be reports and changes made if necessary,' said the official UAE news agency.

Oman's official television station urged people to stay in their homes, avoid highways and turn off power as the cyclone passes through its territories.

Oman's state media had earlier said thousands of people were evacuated from the Masirah Island in the Arabian Sea. A weather service official told the state television the storm is expected to be worse than a destructive one that hit the island in 1977.  

A shipping agent told Reuters Oman's Sur export terminal, which handles 10 million tonnes per year of liquefied natural gas exports had been closed because of the approaching storm and the Mina al Fahal oil terminal that ships all Oman's 650,000 barrels per day of oil exports, was likely to be shut soon.

The Sultan Qaboos port, which handles vehicles and containers, was also closed, another shipping source said.

'It's quite common to have heavy rains at this time of year in Oman,' said a Western executive based in Muscat. 'But this weather is quite unusual and they're calling it the worst in Oman's modern history.' Oman's position at the mouth of the Gulf made it particularly vulnerable to the approaching storm, which had maximum sustained winds of 125 miles per hour (mph) -- the equivalent of a Category Three hurricane -- at 0855 GMT, the US military's Joint Typhoon Warning Center said.

An Omani oil ministry official said earlier oil exports were continuing as normal for the time being. 'I am not far from the Mina al Fahal export terminal and the seas are OK,' he said.

To the west of Oman, the world's top oil exporter Saudi Arabia, said its main oil region would not be affected.

The US military's Joint Typhoon Warning Center forecast that, after passing Oman, the storm would head towards Iran across the Gulf of Oman, a major shipping channel.

'The current forecast keeps the eye of Gonu over water as it brushes by Oman and then turns the system toward southern Iran,' Kevin Roth, senior meteorologist at the Weather Channel, wrote on the company's Web site (www.weatherchannel.com).

 If so, wind speeds would slow to 75 mph, Roth wrote.

He said the storm would pass Oman late Tuesday afternoon or evening, US time. The last hurricane-strength tropical storm to hit Oman was in May 2002, Roth said.

DTN Meteorlogix said the storm, with maximum sustained winds of 160 mph and gusts up to 195 mph, was expected to decrease in intensity before making landfall in Oman on Wednesday.

A shipping agent for nearby Opec member the United Arab Emirates said on Monday no warning had been issued there.

Operations at the United Arab Emirates' port of Fujairah were continuing as normal.

 A Dubai-based shipping agent also said no official warning had been sent to his company. - Reuters