The United Arab Emirates has suspended all trade, commercial exchanges and financial transactions with Iran after accusing Tehran of renewed missile attacks, in a move that could further isolate the Islamic Republic as it faces US sanctions and mounting economic pressure.
The decision came after two ballistic missiles were reportedly fired towards the UAE late Tuesday, triggering nationwide warnings for residents to seek shelter. Both missiles fell into the Persian Gulf, according to Emirati authorities.
The UAE Foreign Ministry said on Wednesday that, despite its continued commitment to “dialogue, cooperation and regional integration,” it had decided to halt economic ties with Iran until further notice.
“In light of regional escalations that undermine regional and international peace and security, all trade, commercial exchanges and financial transactions with Iran have been halted until further notice,” the ministry said.
The UAE Defense Ministry said its assessment indicated that the missiles were targeting maritime traffic, although it was not immediately clear whether Emirati vessels or UAE territorial waters were the direct target.
Iran has denied responsibility. Iranian Foreign Ministry spokesperson Esmail Baghaei said Tehran had not launched any missiles towards the UAE.
The latest escalation comes after weeks of attacks on shipping in and around the Strait of Hormuz, where Iran has sought to exert pressure on maritime traffic.
The UAE has accused Iran of targeting vessels linked to Abu Dhabi’s state-owned oil and gas company ADNOC. Four ADNOC tankers have reportedly come under attack over the past two weeks. None of those incidents caused casualties, but they prompted strong condemnation from the UAE and other Gulf states, including Kuwait and Bahrain.
Since the beginning of the conflict, nearly 20 ADNOC vessels have reportedly been targeted by missiles and drones in the Strait of Hormuz, leaving one person dead and another 20 wounded.
Iran has accused the UAE and other US allies in the Gulf of facilitating American military operations against Tehran. On Wednesday, Iran’s Chief of Staff Gen. Ali Abdollahi issued a fresh warning to countries on the southern shores of the Persian Gulf.
“Any assistance or facilitation provided to the aggressor U.S. military amounts to participation alongside U.S. military forces,” he said in a statement distributed by Iran’s semi-official Fars news agency.
The Strait of Hormuz has emerged as one of Iran’s most significant strategic advantages in the conflict. Roughly one-fifth of global oil and natural gas trade passed through the waterway during peacetime, making any disruption there a major threat to international energy markets.
Iran has launched hundreds of ballistic missiles and thousands of drones during the conflict. Tehran says its attacks have targeted US military assets, although strikes have also hit buildings and critical infrastructure in Dubai and Abu Dhabi, including Dubai International Airport, ports and energy facilities.
The UAE’s decision to suspend trade with Iran could further weaken an already strained Iranian economy. Before the conflict, the Emirates was one of Iran’s largest trading partners, accounting for more than 30% of Iranian imports, worth around $21 billion, according to the World Trade Organization’s latest figures for 2024.
The UAE was also the destination for nearly 13% of Iran’s exports, valued at roughly $7 billion.
Much of the trade between the two countries ground to a halt after the conflict intensified. Some maritime trade resumed in late June as hostilities eased, according to Iran’s state-run IRNA news agency, although the scale of more recent commercial exchanges remains unclear.
The Emirati suspension comes as Washington prepares to impose additional economic pressure on Tehran. US Treasury Secretary Scott Bessent said last week that the measures would combine further economic isolation with the continued American blockade of Iranian ports.
Iran is already facing severe economic difficulties. The International Monetary Fund forecasts inflation of nearly 70% this year and an economic contraction of 5.4%, while the Iranian rial has fallen to record lows.
The suspension of trade with the UAE, therefore, threatens to cut off another important economic channel for Tehran, further intensifying the pressure on Iran as the conflict increasingly revolves around control of the Strait of Hormuz and the country's ability to maintain access to regional trade.
