Gonu was blamed for 28 deaths so far, including three in Iran, but the storm spared the region's oil installations, with analysts saying its affect was minimal.
But as Gonu made its way across the Gulf of Oman to the Iranian coast, the cyclone — a rarity in the Middle East — was downgraded to a tropical storm, according to the U.S. military's Joint Typhoon Warning Center.
In Muscat, people scoured the city searching for cars swept away when water barreled through the streets. Entire grassy fields disappeared under several feet of water, as angry waves battered the beachfront normally thronged with European tourists. Several people were seen taking photographs of the unusual destruction in this normally hot and dry country.
Muscat's mountain backdrop added to the havoc. The torrential rains that poured onto the bone-dry peaks of the city's postcard-perfect mountains, flowed into canyons and dry riverbeds that channeled the raging water directly into the city.
Muscat's lush palm and eucalyptus groves were blown over along with telephone and power lines. Even the normally sparkling blue sea resembled a foamy chocolate milk.
"The capital Muscat became a lake," Oman Royal Police spokesman Abdullah al-Harthi told Iran TV.
Residents spoke of a night of horror as turgid floodwaters ripped into their homes, carried off refrigerators and cars, and left their streets gouged by sinkholes and caked in shoals of mud.
Nidhal al-Masharafi, 31, hunkered all night on his rooftop with his wife and six children.
"The water broke through the walls. It came inside the house. It swept everything out," al-Mashrafi said. A kilometer from his home, he found his 2006 Subaru Outback, lying atop a taxi in the flooded neighborhood.
As the massive cleanup got under way, homeowners hauled soaked bedding and carpets from their villas, piling it in the streets for the bulldozers busy clearing away mud and rocks.
Gonu was scheduled to hit land on Iran's southeastern coast late Thursday, but U.S. military's Joint Typhoon Warning Center predicted it would further weaken to a tropical depression by then.
The storm was likely to spare Iran's offshore oil installations that lie more than 200 kilometers (120 miles) to the west, the center and oil officials said. There also was little damage to Oman's relatively small oil fields. But Wednesday's raging seas had prevented tankers from sailing from Omani ports, effectively shutting down the country's oil exports.
Despite earlier predictions that the storm could have a damaging affect on the oil market, analysts on Thursday said its impact was minimal, with most of the movement occurring when the news broke that Gonu was headed this way.
"By now the whole thing must have calmed down, because the storm passed through. ... The impact was when the news (first) came out. Now the people have forgotten about that," said Manouchehr Takin, an analyst at the London-based Center for Global Energy Studies.
Brent crude fell on confirmation that Oman's main oil port hadn't suffered major damage from Gonu. In London, July Brent crude futures dropped 17 cents to US$70.85 a barrel on the ICE Futures exchange.
The Iranian state-owned Shana oil and energy news Web site said that as a precaution, Iran would stop operations at two offshore platforms but there were no reports of damages or difficulties at the country's oil installations.
"Everything is running as usual," Bahram Narimanian, spokesman of Iran's Offshore Oil Company told The Associated Press.
On Thursday, the storm sustained winds of up to 67 kph (41 mph), less than half its strength of 153 kph (95 mph) just 24 hours earlier, the Joint Typhoon Warning Center said. Even with the weaker wind speeds, Gonu, which means a bag made of palm leaves in the language of the Maldives, is believed to be the strongest cyclone here since record-keeping started in 1945.
At least 25 Gonu-related death were reported in Oman, including members of police rescue squads, and 26 others were reported missing, said al-Harthi, the police spokesman. Rescue teams were searching the devastated areas using helicopters and boats, he said.
Across the Gulf of Oman, Iranian state TV reported that a resident of the port city of Bandar Abbas was killed in a car accident Wednesday due to low visibility. Two provincial government workers bringing emergency supplies to a flooded area also were killed when a river overflowed and flipped their truck in Jask, state TV's Web site said.
The U.S. Navy said it was providing assistance to mariners, flying missions international airspace over the north Arabian Sea to assess Gonu's impact and would ready to offer other assistance if requested.
More than 20,000 people were evacuated Wednesday from their homes in Oman and were provided with government dwellings stocked with food, water, medicine and other supplies.
In another sign that Oman authorities were well-organized, Royal Oman Police sent text messages to mobile phones throughout the duration of the storm, urged residents to stay inside, said Brinda Toprani, an architect from Mumbai, India, who was visiting her parents in Muscat.
In Iran, authorities also evacuated hundreds of people living in the port city of Chabahr on the coast of the Gulf of Oman on Wednesday. But by Thursday, Gonu lost steam and the violent storm subsided into light rains and wind, though authorities warned people to stay away from the coast Thursday night as a precaution.
"Thanks to God, people are back in the bazaars and streets of the city," said Abbas Jafari, a 47-year-old taxi driver. "Yesterday was terrible. I had never seen such a storm in my life."