Iran denies launching missiles at the UAE, suggesting the incident was a ‘false flag operation’.
The United Arab Emirates has imposed an indefinite trade embargo on Iran after accusing Iranian forces of firing two ballistic missiles at the country, an allegation Tehran denies.
In a statement early on Wednesday, the UAE’s Ministry of Foreign Affairs said the decision was made in “light of escalations that undermine peace and security in the region”.
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“All trade, commercial exchanges and financial transactions with Iran have been halted until further notice,” it added.
The statement came after the UAE’s Ministry of Defence said its air defences detected two ballistic missiles launched from Iran, with one falling outside the country’s territorial waters and the other landing within them.
In a follow-up statement, the ministry said the missiles had been “targeting maritime traffic” and promised to “resolutely confront any attempt to undermine the security of the nation or maritime navigation in the region”.
Iran’s Ministry of Foreign Affairs rejected the accusation as “baseless”, with spokesman Esmaeil Baghaei suggesting it was a “false flag operation” amid the war launched by the United States and Israel against his country.
Baghaei warned the claim “contradicts the principle of good neighbourliness” and urged regional parties to steer clear of what he called unfounded claims against Tehran, and argued that any honest assessment of the situation must also weigh the “malicious actions” of the US and Israel.
US naval blockade
Tuesday’s attack came a day after a 60-day window for US-Iranian peace talks expired without a breakthrough in the more than five-month-old conflict.
In the war’s first six weeks, Iran targeted the UAE with retaliatory strikes more than any other Gulf country, launching more than 530 ballistic missiles, dozens of cruise missiles and over 2,200 drones at what it described as US assets. Tuesday’s strike is the first targeting the UAE since May, and comes days after Abu Dhabi accused Tehran of attacking two of its state-owned ADNOC (Abu Dhabi National Oil Company) vessels in the Strait of Hormuz.
Iran has not claimed responsibility for the ADNOC attacks.
The trade embargo comes as the US maintains a naval blockade on Iranian ports, with President Trump signalling a pivot towards economic pressure, rather than military pressure, to compel Tehran into accepting US demands.
Mark Kimmitt, a retired US general and former assistant secretary of state, told Al Jazeera the UAE’s trade embargo could hit Iran harder than anything Washington has imposed, with Dubai having quietly become Iran’s most important trading partner, edging out both China and Turkiye to supply roughly a third of everything Iran imports each year.
The UAE had suspended direct cargo shipping between the two countries in early March, just days after the war began, and resumed trade only in late June via Dubai’s Jebel Ali Port.
“I don’t think that you can overstate or understate the importance of the trade, both financial and goods trade, between Dubai and Iran,” Kimmitt said.
That reliance runs deeper than goods on ships, given Dubai’s standing as a global financial hub, which Kimmitt said has long given Iran a discreet way to move money around international sanctions, cutting off a route Tehran has long relied on for years. “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,” he said.
The former general said he doesn’t expect other Gulf states to follow suit immediately, predicting a “wait-and-see” approach even if Iranian attacks continue.
But he said the UAE’s move is significant enough that Tehran could interpret it as bordering on an act of war, likening it to the near-total embargo the US imposed on Japan after World War II.
