UAE imposes indefinite trade embargo on Iran
Al Jazeera English
The UAE has announced an indefinite suspension of trade and financial transactions with Iran, citing alleged missile attacks on its territory. Iran denies the accusations, calling them a "false flag" operation. The embargo could significantly impact Iran's economy, given its heavy reliance on UAE trade.
On August 19, the UAE Foreign Ministry announced the suspension of all trade activities, goods exchanges, and financial transactions with Iran until further notice. The decision comes amid escalating regional tensions, following claims by the UAE Ministry of Defense that Iranian forces launched two ballistic missiles, one landing in the country's territorial waters and the other outside.
The UAE Defense Ministry stated that these missiles were aimed at maritime activity and pledged to "firmly confront any schemes threatening national or maritime security in the region." Meanwhile, Iran's Foreign Ministry dismissed the accusations as "baseless." Spokesman Esmaeil Baghaei described the allegations as a "false flag campaign" in the context of the US-Israel war with Iran.
Analysts say the embargo holds particular significance, as Iran heavily relies on the UAE for essential imports and access to financial markets. Retired General Mark Kimmitt, a former US Assistant Secretary of State, told Al Jazeera: "In many ways, the UAE embargo is even more meaningful than the US embargo," referring to US sanctions and naval blockades on Iranian ports.
The new move comes just days after the memorandum of understanding (MoU) between the US and Iran, signed on June 17, expired on Monday, with little prospect of renewal.
Escalating tensions backdrop
Iran has repeatedly struck the UAE since the war began on February 28 with US-Israeli airstrikes on Tehran that killed Supreme Leader Ali Khamenei. Iran has launched more than 530 ballistic missiles, 26 cruise missiles, and over 2,200 drones targeting locations in the UAE, which Tehran calls US military assets. The UAE asserts that civilian sites have also been hit by missiles or debris from THAAD and Patriot defense systems.
On March 1, the Jebel Ali port in Dubai—the world's largest artificial deep-water port—was attacked. A day later, a fire broke out at the Musaffah fuel depot southwest of Abu Dhabi following a drone strike. On March 17, oil loading operations at Fujairah port were partially halted after a drone attack. On May 18, a fire occurred near the Barakah nuclear power plant following a drone attack.
According to statistics, Iranian attacks have killed 15 people in the UAE, including two military personnel, one civilian contractor, and 12 civilians, with 246 others injured.
The latest attack was the first on the UAE since May, just days after Abu Dhabi accused Tehran of striking two vessels of the Abu Dhabi National Oil Company (ADNOC) in the Strait of Hormuz. Iran also denied this incident.
UAE-Iran trade ties
Data from the Observatory of Economic Complexity (OEC) shows official trade between the UAE and Iran reached $6.2 billion in 2023, with UAE exports to Iran around $5.8 billion and imports around $450 million. Iran imported $2.81 billion worth of phones from the UAE, along with computers, tobacco, and nuts; in return, it exported seeds, fruits, spices, crustaceans, and building stone.
Beyond official trade, the UAE has long been a key informal trade intermediary, helping Iran bypass sanctions. When Western exporters stopped selling directly, Dubai merchants purchased and re-exported consumer goods, industrial equipment, and food into Iran.
Iran is one of the most heavily sanctioned countries in the world. Sanctions have reduced Iran's GDP per capita from $8,000 in 2012 to $5,000 in 2024.
Impact of the embargo
Mr. Kimmitt believes the UAE trade embargo could harm Iran more than any US sanctions to date. Dubai has become Tehran's most important trading partner, surpassing China and Turkey, supplying about a third of Iran's annual imports.
The UAE suspended direct cargo shipping with Iran since early March, just days after the war began, and resumed trade in late June through Jebel Ali port. The port, operated by DP World, is a key transshipment hub for the Indian subcontinent, Africa, and Asia, and has long been a gateway for goods transiting into Iran.
Beyond goods, Dubai is also a global financial center, providing Iran with a covert channel for money transfers to evade international sanctions. Mr. Kimmitt assessed that the UAE's move is serious enough that Tehran might view it as "almost an act of war," likening it to the near-total embargo the US imposed on Japan after World War II.
