The United Arab Emirates (UAE) has imposed an indefinite and total ban on all trade, commercial exchanges, and financial transactions with Iran.
The indefinite trade embargo comes after the Iranian forces fired two ballistic missiles at the UAE, which the UAE military claimed were targeting maritime traffic.
In a recent attack, one missile reportedly landed in UAE territorial waters, while the other fell outside them.
In a statement, the UAE’s Ministry of Foreign Affairs said: “All trade, commercial exchanges and financial transactions with Iran have been halted until further notice.”
The decision was made in “light of escalations that undermine peace and security in the region”, it added.
Iran’ Ministry of Foreign Affairs strongly denied these accusations, calling them “baseless” and a potential “false flag operation,” while warning that such claims could harm good neighbourly relations.
The strike is the first reported attack on the UAE since May. Recently, Abu Dhabi blamed Tehran for attacking two ADNOC, the state-owned Abu Dhabi National Oil Company. But Iran refused to take responsibility for the attacks.
Will the trade embargo affect Iran’s economy?
Analysts suggest that this embargo could be more damaging to Iran than US imposed naval blockade and sanctions. When it comes to trade-based relations, Dubai currently serves as Iran’s most important trading partner, responsible for one-third of its annual imports and acting as an important financial hub for evading international sanctions.
Official goods trade between the UAE and Iran reached $6.2 billion in 2023, according to the latest Observatory of Economic Complexity (OEC) data. The trade balance heavily favoured the UAE, which recorded roughly $5.8 billion in exports to Iran against just $450 million in imports.
In May 2024, both countries held the first session of their Joint Economic Committee summit in Abu Dhabi. In this session, both Gulf countries agreed to strengthen cooperation in logistics, transport, agriculture and renewable energy.
“In many ways, the embargo being put on by the UAE is even more significant than the embargo being put on by the United States,” Mark Kimmitt, a retired US general and former assistant secretary of state said.
The UAE also suspended direct cargo shipping with Iran in early March and resumed it in late June through Dubai’s Jebel Ali Port.
Kimmitt noted that the UAE’s action is severe enough to be viewed by Tehran as “bordering on an act of war,” drawing a comparison to the near-total embargo the US placed on Japan following World War II.
