UAE Cuts All Trade Ties with Iran Following Missile Attacks Amid Rising Economic Pressure

On Tuesday, the United Arab Emirates announced it would sever all trade, exchange, and financial dealings with Iran in response to missile attacks it attributed to the Iranian regime. This move comes amid escalating tensions following repeated Iranian strikes on UAE oil tankers near the Strait of Hormuz and ongoing US sanctions aimed at pressuring Tehran. The announcement followed a phone call between US President Donald Trump and UAE President Mohammed bin Zayed, though US involvement in the UAE's decision remains unclear.

The UAE, which has taken a generally tougher stance on Iran compared to its Gulf neighbors, reported at least four Iranian attacks on its oil tankers in recent weeks. Despite a relative lull in missile alerts within the UAE itself, two missiles were reportedly fired toward maritime targets in the Gulf, prompting the UAE's decisive trade cutoff. Iran denied responsibility for the attacks, but Abu Dhabi rejected these claims.

Economically, the UAE has been a critical partner for Iran, serving as a major trade hub and re-export center. In 2024, bilateral trade volume reached $28 billion, with the UAE being Iran's largest import source and a significant export destination. Experts warn that the UAE's embargo could deepen Iran's economic crisis, which is already severe due to US sanctions and inflation projected near 70% this year. The Iranian rial recently hit a historic low against the dollar.

Meanwhile, Iran's Revolutionary Guards claimed to have seized a UAE-linked oil tanker in the Strait of Hormuz, escalating regional tensions. Iran's new military chief warned neighboring states against supporting US military operations, equating such assistance with direct involvement.

President Trump reiterated that no negotiations with Iran are ongoing, emphasizing the continuation of a naval blockade preventing Iranian oil exports. This contradicts recent statements by his advisor Jared Kushner about improved talks, with reports indicating Trump ordered a halt to negotiations due to Iran's unwillingness to meet US demands. The US plans to announce unprecedented economic isolation measures against Iran soon, aiming to force Tehran into compliance on ending the conflict.