At least 1,000 protesters had gathered for a second straight day in a main square in Sohar before police tried to disperse them first with tear gas and batons before firing on them with rubber bullets, witnesses said
"Two people have died after police fired rubber bullets in the crowd," one witness, who declined to be named, told Reuters from Sohar. Another witness said the police had used live ammunition, but that could not be confirmed.
Sultan Qaboos bin Said, trying to ease tensions in the normally sleepy Gulf state as Arab unrest spread in the region, reshuffled his cabinet on Saturday, a week after an earlier protest in the capital Muscat.
Protests were also taking place in the southern town of Salalah where demonstrators have been camped out since Friday near the office of a provincial governor.
After the clashes in Sohar, police pulled back from the protest and the crowd, some of whom were carrying petrol and matches, was making its way to a police station, said one witness, who gave his name only as Mohammed. Helicopters circled overhead.
Witnesses said at least eight people had been hurt in the melee in addition to the two fatalities. Roadblocks had been set up on a main road between Sohar and Muscat, they said.
Gulf Arab countries have stepped up measures to appease their populations following popular unrest that toppled the leaders of Tunisia and Egypt.
Last week, about 300 Omanis demanded political reforms and better pay in a peaceful protest in Muscat as unrest in other Middle East countries and North Africa turned increasingly violent.
In mid-February, the sultanate increased the salary for national workers in the private sector by 43 percent to $520 per month. There is no official unemployment rate, but a CIA estimate from 2004 put the rate then at about 15 percent.