The United Arab Emirates has suspended all trade, commercial exchanges, and financial transactions with Iran until further notice following a new ballistic missile attack.
Afra al-Hameli, the director of the strategic communications department at the UAE Ministry of Foreign Affairs, announced the complete halt in economic relations on August 19. The decision comes a day after authorities in Abu Dhabi accused Iran of launching two ballistic missiles, marking the first such incident reported since early May.
The UAE Foreign Ministry explained that economic ties were severed in response to regional escalation that threatens both regional and international peace and security. However, al-Hameli stated that the Emirates remains in favor of dialogue and cooperation, describing economic integration as an essential tool for achieving stability and prosperity in the region.
The United Arab Emirates is a federation of seven emirates located on the Arabian Peninsula, governed from its capital in Abu Dhabi. Its largest city, Dubai, sits on the coast of the Persian Gulf and serves as a primary international commercial center.
The commercial suspension could deliver a heavy economic hit to Tehran. News agency Reuters described Dubai as one of Iran's most vital economic channels. For many years, the UAE has served as a major trading partner and re-export hub for Iranian goods, helping Tehran mitigate the impact of Western trade sanctions.
Attacks on shipping in the Strait of Hormuz
In August, the state-owned Abu Dhabi National Oil Company, one of the largest energy producers in the world, reported that several of its vessels were attacked by missiles and drones. The company said the strikes occurred in the Strait of Hormuz following the start of the war between the United States and Iran.
Iran has not claimed responsibility for the strikes on the oil company's ships. However, Iran's Islamic Revolutionary Guard Corps previously threatened to take action against vessels traveling through the strait if they were linked to adversaries of Tehran or failed to comply with Iranian directives.
The Strait of Hormuz is a narrow maritime chokepoint connecting the Persian Gulf to the Gulf of Oman and the open ocean, serving as the main transit route for sea-borne petroleum exports from the Middle East.
The ballistic missile strikes blamed on Iran occurred after the end of a 60-day period set for peace negotiations between the United States and Tehran, which concluded without reaching a breakthrough. The breakdown in talks has amplified concerns of a broader conflict. Since February, maritime disruptions across the Strait of Hormuz have rattled global markets.
Bypassing the Persian Gulf trade routes
To secure its energy exports against future disruptions, the United Arab Emirates plans to double its oil export capacity bypassing the Strait of Hormuz by 2027. State energy producer ADNOC is building a new pipeline extension to the eastern port of Fujairah, located outside the Gulf chokepoint.
In June, UAE Minister of State for Foreign Trade Thani Al Zeyoudi reported that the country is actively developing a strategy to end its dependence on the Strait of Hormuz.
In August, Emirati firm Adnoc Gas Plc revealed that it is examining options to construct a new liquefied natural gas facility outside the Strait of Hormuz.
