UAE suspends all trade with Iran after renewed missile fire

Dubai: The United Arab Emirates suspended all trade and financial transactions with Iran on Wednesday after saying the country came under renewed missile fire, further tightening economic pressure on the Islamic Republic amid the ongoing conflict.

The UAE Foreign Ministry said the suspension would remain in place “until further notice”, after two ballistic missiles were fired toward the country late Tuesday. Both missiles splashed down in the Persian Gulf.

The incoming missile fire triggered nationwide warnings for UAE residents to seek shelter Tuesday night, marking the first such alert in several weeks.

The UAE Defence 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 intended targets.

Iranian Foreign Ministry spokesperson Esmail Baghaei denied that Iran had launched any missiles toward the UAE.

The Emirati Foreign Ministry said the decision to halt trade was a punitive measure but stressed that the country remained committed to “dialogue, cooperation and regional integration.”

The move is significant for Iran because the UAE has long served as a major trading partner and a key re-export hub, helping Tehran obtain goods and access commercial infrastructure despite U.S. sanctions.

“the UAE has been very important for Iran as a re-export hub and has helped the country absorb some of the shocks caused by sanctions,” Mohammad Farzanegan, a professor of Middle Eastern economics at Germany’s University of Marburg, told The Associated Press.

“Iran therefore depends heavily on the UAE, not because the UAE itself produces one-third of Iran’s imports, but because it serves as a major gateway for Iran to access third-country goods and commercial infrastructure.”

Trade between the two countries had largely stalled after the conflict began, although some maritime commerce resumed in late June as hostilities eased, according to Iran's state-run IRNA news agency.

The latest escalation also comes after repeated attacks on shipping in the Strait of Hormuz. Iran has attacked vessels attempting to use the strategic waterway, including four tankers owned by Abu Dhabi’s state-owned ADNOC oil and gas company over the past two weeks.

None of those attacks caused injuries, but they prompted strong condemnation from the UAE as well as other Gulf countries, including Kuwait and Bahrain.

Since the conflict began, nearly 20 ADNOC vessels have reportedly been attacked by missiles and drones in the Strait of Hormuz. One person has been killed and another 20 wounded.

The strait has emerged as Iran's most significant strategic advantage in the conflict. Before the war, roughly one-fifth of globally traded oil and natural gas passed through the waterway.

The U.S. and Israel, which launched the war on Feb. 28, have cited several objectives, including ending Iran's nuclear programme and toppling its government. But the conflict has increasingly centred on control of the Strait of Hormuz and the movement of commercial shipping.

U.S. President Donald Trump said Tuesday that the strait was “open and operating” and posted a map depicting it as a U.S. territory. Iranian Deputy Foreign Minister Kazem Gharibabadi called him a “deluded man.”

MarineTraffic data showed that 10 vessels transited the strait on Tuesday — fewer than a tenth of the number that typically passed through the waterway before the war, when there were no restrictions.

Iran has launched hundreds of ballistic missiles and thousands of drones during the conflict. Tehran has said its attacks were aimed at U.S. assets, although strikes have hit buildings in Dubai and Abu Dhabi, as well as Dubai’s commercial airport, ports and energy infrastructure.

Iran has accused the UAE and other U.S. allies in the Gulf of facilitating American military operations against Iran. Iran's chief of staff, Gen. Ali Abdollahi, issued a fresh warning Wednesday 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.

UAE-Iran trade ties

Before the war, the UAE was among Iran's biggest trading partners. According to the World Trade Organisation's latest figures from 2024, the UAE accounted for more than 30% of Iran's imports, worth about $21 billion, and was the destination for nearly 13% of its exports, valued at around $7 billion.

However, the trade suspension could also carry economic risks for the UAE, particularly because the country has positioned itself as a regional business and financial hub.

“As a relatively small country seeking to remain a regional hub for business and finance while attracting tourists and investors, the UAE depends heavily on regional stability,” Farzanegan said. “Any major conflict with Iran can therefore cause substantial damage to its economy.”

The announcement comes as the United States prepares to impose additional economic pressure on Iran. U.S. Treasury Secretary Scott Bessent said last week that the measures would combine economic isolation with the continued blockade of Iranian ports.

The latest pressure follows an intense bombing campaign that has struck industrial and civilian infrastructure as well as military targets.

Iran's economic outlook has deteriorated sharply amid the conflict. The International Monetary Fund forecasts inflation of nearly 70% this year and an economic contraction of 5.4%, while Iran's rial has fallen to record lows.