The United Arab Emirates said it would suspend all trade and financial transactions with Iran, in a move that stands to add fresh economic pressure on Tehran as Washington seeks a path to end its war.
The announcement of a cut in economic ties came shortly after the UAE Defense Ministry said Tuesday that Iran had fired two ballistic missiles toward the Gulf state.
The trade decision also followed a call between President Donald Trump and Emirati President Sheikh Mohamed bin Zayed al-Nahyan earlier on Tuesday.
The UAE’s Foreign Ministry said late Tuesday that the move was “in light of regional escalations that undermine regional and international peace and security.”
The statement added that the UAE is “firmly committed to safeguarding the integrity of the international financial system.” It did not specify when the suspension would take place.
The UAE, one of Iran’s biggest trading partners, said at the start of the war that it was halting trade, but in recent weeks, news stories have focused on the resumption of business ties with Tehran.
Abdulkhaleq Abdulla, an Emirati analyst and political science professor based in Dubai, said that “everybody thought there was an understanding – even if not necessarily announced – between the UAE and Iran that as long as Iran did not engage militarily, there would be an opening of business ties.”
But he said that changed because of the apparent missile targeting by Iran.
“This was a surprise, because we thought they knew the limits,” he said. “It showed again that we cannot trust Iran.”
Whether Iran meant to target the UAE with the missiles on Tuesday – which Iran has denied – or Emirati ships close to its shores, the strikes “sent a message that we are back to wartime,” he said.
The subsequent decision to cut all trade relations, he said, was a sign by the UAE that “enough is enough.”
“If you don’t stick to where you were, then we are going back to where things were, with zero transactions,” he said.
Marc Sievers, a former U.S. ambassador to Oman who is based in Abu Dhabi, said the UAE announcement was probably coordinated with the United States, noting the timing of Trump’s call to the president and a call between Secretary of State Marco Rubio and UAE national security adviser Tahnoon bin Zayed al-Nahyan, which also took place on Tuesday.
Having the UAE on board when it comes to the U.S. strategy of economic attrition makes sense, he said, noting how much of the IRGC’s money is reportedly tied to Dubai.
The United States has sought to further pressure Iran economically as the two nations are locked in a standoff over the Strait of Hormuz, the crucial waterway for global oil supplies, and as talks to end the war have faltered.
In addition to an ongoing U.S. naval blockade, Treasury Secretary Scott Bessent last week threatened that the U.S. would soon “apply measures like have never been seen in the history of the economic isolation on a country.”
The UAE, a close U.S. ally located across the Persian Gulf from Iran, had maintained ties with Tehran despite years of rising tensions. Dubai long served as a major trading hub for Iran and a commercial gateway for Iranian businesses.
In 2024, the UAE was Iran’s largest source of imports, with some $21 billion in goods accounting for about 30 percent of total imports, according to the World Trade Organization.
Iran on Wednesday denied launching a missile attack at the UAE. Iranian Foreign Ministry spokesman Esmaeil Baqaei said the “unfounded” allegations “undermine ongoing efforts to strengthen trust among regional countries.”
The UAE Defense Ministry said the two missiles it detected originated from Iran and were targeting maritime traffic. It said one fell into UAE territorial waters, while the other dropped into the sea outside them.
The UAE became a key target of Iranian retaliation after the U.S. and Israel launched the war in late February. Iran has sent swarms of drones and missiles at regional states that host U.S. bases, including the UAE, which reported more than 2,600 attacks.
During the war, the UAE has adopted a more hawkish stance on Iran than some of its Gulf neighbors.
The attacks, and tensions between the two countries, appeared to ease since Washington and Tehran signed a tentative ceasefire agreement in June. That memorandum of understanding has now expired without a longer-term peace deal.
In recent days, however, the UAE has accused Iran of hitting its oil tankers in the Strait of Hormuz.
Mohammed Baharoon, director general of B’huth, a Dubai research center, said there is “an understanding that there are different power centers in Iran, and that they are behaving differently. ”
At this point, it seems like there is a faction in Iran that insists that the only way things will be achieved is by force,” he said, adding that the UAE’s announcement on Tuesday “sends a very strong message to Iran”
In recent months, he said, the UAE had been emphasizing the importance of “geo-connectivity,” allowing some level of trade and business ties with Iran even as it made clear its political differences. But the Iranian missiles changed that calculation.
“The world economy is like a highway,” he said. “But if you want to use the highway, then you have to observe the rules of the road.”
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