The United Arab Emirates (UAE) has suspended all trade and financial transactions with Iran "until further notice" following renewed missile attacks, adding further pressure to an Iranian economy already affected by US sanctions and the ongoing conflict.
This announcement comes after two ballistic missiles were fired toward the country and landed in the Persian Gulf. Emirati authorities said assessments indicated the missiles had targeted maritime traffic, although Iran denied responsibility for the launches.
As one of Iran's most important trading partners, the UAE's decision is particularly significant. Before the war, the UAE provided more than 30 percent of Iran's imports, valued at around $21 billion, according to 2024 World Trade Organization figures. It was also the destination for almost 13 percent of Iranian exports, worth approximately $7 billion.
The relationship extends beyond direct bilateral trade. The UAE has served as an important re-export hub through which Iran can access goods and commercial infrastructure from other countries, helping it mitigate some of the effects of international sanctions.
Most trade between the two countries had already stalled earlier in the conflict before some maritime exchange resumed in late June as hostilities eased. The latest suspension therefore represents a renewed setback for those trade flows.
It also comes amid continued disruption in the Strait of Hormuz. Nearly 20 vessels operated by the UAE's state-owned ADNOC have been attacked by missiles and drones since the conflict began, according to AP. Just ten vessels transited the strait on Tuesday, less than a tenth of the number typically recorded before the war.
While the embargo is likely to increase economic pressure on Iran, it also carries risks for the UAE. Mohammad Farzanegan, professor of Middle Eastern economics at the University of Marburg, explained to AP News that the country relies heavily on regional stability to maintain its position as a business and financial hub.
With a major gateway for Iranian imports now restricted and traffic through the Strait of Hormuz severely reduced, the latest escalation adds another layer of uncertainty to trade and supply chains across the Gulf.