UAE freezes trade and financial dealings with Iran

The UAE has halted all trade, commercial exchanges and financial transactions with Iran until further notice as escalating security tensions deepen economic disruption across the Gulf.

Afra Al Hameli, Director of the Strategic Communications Department at the Ministry of Foreign Affairs, announced the decision while rejecting allegations about the status of economic relations between the UAE and Iran. She said regional escalations were undermining peace and security at both regional and international levels.

The sweeping measure marks a sharp deterioration in economic ties between two neighbours whose commercial relationship has historically remained significant even during periods of political disagreement. It affects trade flows, commercial dealings and financial transactions, with no timetable announced for their restoration.

The announcement followed the detection of two ballistic missiles that UAE authorities said had been launched from Iran. The Ministry of Defence said its assessments indicated the missiles were targeting maritime traffic. Both fell into the sea, and the episode prompted security alerts across the country. Iran rejected the UAE’s account, with Foreign Ministry spokesman Esmaeil Baghaei describing the accusations as baseless.

The confrontation threatens to reverse efforts over the past several months to restore limited commercial links between the two countries. Direct cargo shipping between the UAE and Iran had resumed through Dubai’s Jebel Ali Port in late June after being suspended in early March following the outbreak of the wider conflict.

Economic links with the UAE have long provided Iran with an important route to regional and international markets. Dubai in particular has served as a major trading and financial centre for Iranian businesses, although sanctions imposed on Tehran have progressively restricted banking relationships, payments and access to international financial networks.

The latest suspension could therefore have consequences beyond bilateral merchandise trade. Banks, shipping companies, logistics operators, commodity traders and businesses with exposure to Iran may face additional compliance requirements or interruptions to payments and deliveries. The extent of the impact will depend on how authorities implement the prohibition and whether exemptions are introduced for specific categories of goods or transactions.

The decision comes as tensions surrounding the Strait of Hormuz again dominate regional security calculations. Shipping through the strategically vital waterway remains severely disrupted, despite conflicting assertions over whether normal navigation has resumed. Vessel crossings have remained at unusually low levels, while an unidentified projectile struck a ship travelling through the strait on Tuesday, damaging its engine room and causing a crew casualty.

The disruption has intensified concern in energy and financial markets. The Strait of Hormuz normally carries about one-fifth of global oil and liquefied natural gas supplies. Brent crude, which reached $126 a barrel during the conflict, settled above $91 on Tuesday as uncertainty over shipping and the prospects for a diplomatic settlement persisted.

Diplomatic efforts have also suffered a setback. A temporary ceasefire expired on Monday, while a 60-day framework intended to produce a broader agreement over Iran’s nuclear programme, sanctions and regional hostilities reached the end of its timetable without a durable settlement. US President Donald Trump said no negotiations with Tehran were taking place or scheduled, while Iranian officials maintained that their country remained open to talks under acceptable conditions.

Relations between Abu Dhabi and Tehran had shown signs of tentative improvement earlier in the summer after months of conflict. Reports emerged in June alleging that billions of dollars connected to Iran could be released as part of arrangements intended to reduce hostilities. The UAE subsequently rejected claims that frozen Iranian funds had been released, transferred or facilitated through its banking system.

That diplomatic opening was accompanied by attempts to rebuild commercial activity and reduce the security threat to Gulf states. The latest missile episode and the UAE’s trade suspension underscore how rapidly those efforts have unravelled.