UAE halts Iran trade after fresh missile scare over Gulf waters

The UAE suspended all trade and financial transactions with Iran after a fresh missile scare. The move deepens pressure on Tehran and sharpens Gulf tensions around the Strait of Hormuz.Image used for representational purposes onlyThe United Arab Emirates on Wednesday suspended all trade, commercial exchanges and financial transactions with Iran after saying it had come under renewed missile fire, a move that is expected to deepen Iran's isolation as it faces US sanctions and a blockade.The decision came after nationwide warnings were issued across the UAE on Tuesday night, asking residents to seek shelter after incoming ballistic missile fire was detected. It was the first such alarm in weeks. The UAE said two ballistic missiles were fired towards the country and splashed down in the Persian Gulf late on Tuesday, while Tehran denied launching them.Announcing the decision, the UAE Foreign Ministry said it remained committed to "dialogue, cooperation and regional integration" but had decided to take punitive measures. "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 in a statement.The UAE's Defence Ministry said assessments showed the missiles were aimed at maritime traffic, though it was not clear whether they targeted Emirati ships or the country's territorial waters. Iranian Foreign Ministry spokesperson Esmail Baghaei denied that Iran had launched any missiles towards the UAE. Early in the conflict, the UAE regularly came under intense fire from Iran and most trade between the two countries, once important trading partners, came to a halt. In late June, as hostilities eased, some maritime trade resumed, according to Iran's state-run IRNA news agency.Iran has also been accused of repeatedly attacking ships in and around the Strait of Hormuz. Over the past two weeks, four tankers owned by Abu Dhabi's state-owned ADNOC oil and gas company were attacked, though none of the strikes caused injuries. Since the conflict began, nearly 20 ADNOC vessels have been hit by missiles and drones in the strait, leaving one person dead and another 20 wounded. Iran's ability to control traffic through the Strait of Hormuz, through which a fifth of traded oil and natural gas passed during peacetime, has emerged as its biggest strategic advantage in the war. While the US and Israel, which launched the war on February 28, have cited goals including toppling Tehran's government and ending its nuclear programme, the conflict has increasingly centred on control of the waterway. During the war, Iran launched hundreds of ballistic missiles and thousands of drones in strikes that Tehran said targeted US assets, but which hit buildings in Dubai and Abu Dhabi, Dubai's commercial airport, ports and energy infrastructure.Iran has accused the UAE and other US allies in the Gulf of helping American military attacks on Iran. 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 US military amounts to participation alongside US military forces," he said in a statement carried by the semiofficial Fars news agency.Before the war, the UAE was one of Iran's biggest trade partners, accounting for more than 30 per cent of its imports worth about USD 21 billion, according to the World Trade Organisation's latest figures from 2024. The UAE was also the destination for nearly 13 per cent of Iran's exports worth around USD 7 billion. Mohammad Farzanegan, a professor of Middle Eastern economics at Germany's University of Marburg, said the UAE was a critical partner for Iran. "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," he 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."Farzanegan said the embargo also carried risks for the UAE. "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," he said. "Any major conflict with Iran can therefore cause substantial damage to its economy." The move also comes as the US prepares fresh economic pressure on Iran. Treasury Secretary Scott Bessent said last week the measures would combine economic isolation with the continued blockade of Iranian ports. The pressure follows a heavy bombing campaign on industrial, civilian and military targets. The International Monetary Fund has forecast inflation of nearly 70 per cent in Iran this year and an economic contraction of 5.4 per cent, while the rial has fallen to record lows.With the UAE now halting all trade and financial dealings, the latest missile scare has added a new layer to the conflict, tightening pressure on Iran even as both sides trade accusations over attacks in the Gulf and the Strait of Hormuz.With PTI Inputs- EndsPublished By: India Today Web Desk Published On: Aug 19, 2026 17:58 IST