The United Arab Emirates has suspended all trade, commercial exchanges and financial transactions with Iran after accusing Tehran of launching two ballistic missiles towards its territory, dealing a fresh blow to efforts to ease tensions between the two countries.
The UAE Defence Ministry said its air-defence systems detected two ballistic missiles launched from Iran towards the Gulf state on Tuesday. The incident triggered an emergency alert on residents’ phones and was described as the first direct Iranian attack on the UAE since May.
The ministry later said its assessment indicated that the missiles had been targeting maritime traffic. One missile fell into the sea outside the UAE’s territorial waters, while the other fell within them. No damage or injuries were reported.
UAE freezes economic ties with Tehran
Following the missile incident, the UAE Foreign Affairs Ministry announced that it was halting economic engagement with Iran until further notice.
The ministry said that, “in light of regional escalations that undermine regional and international peace and security, all trade, commercial exchanges, and financial transactions with Iran have been halted until further notice”.
The decision threatens to reverse a gradual restoration of economic and diplomatic links between Abu Dhabi and Tehran. Trade between the UAE and Iranian ports had resumed in some areas, while some Iranian flights to the UAE had also quietly returned.
Tuesday’s emergency alert was the first such warning in several months, apart from a false alert in June. Dubai’s financial district had also begun filling up with bankers, while Emirati authorities had allowed around 20,000 Iranian residents who were outside the country when the war began to return to the UAE.
Iran denies launching missiles
Iran has denied the UAE’s accusation. Iranian Foreign Ministry spokesperson Esmaeil Baghaei rejected the claim and warned that such allegations could undermine regional efforts to rebuild trust.
Baghaei “completely rejected” the UAE’s claim and expressed regret over the accusations against Iran, according to a statement issued by the Iranian Foreign Ministry.
He said the allegations were contrary to the principle of good neighbourliness and could disrupt efforts to strengthen trust between regional countries and prevent further insecurity.
The Iranian Foreign Ministry spokesperson also called on regional countries to refrain from making “baseless accusations” against Tehran, citing the complexities of the ongoing regional conflict and what Iran described as previous false-flag operations.
The UAE Defence Ministry, meanwhile, maintained that its air-defence systems had detected the missiles.
“The first fell outside the country’s territorial waters, while the second fell within its territorial waters,” the ministry said in a post on X.
The UAE military said its forces remained on high alert and were prepared to respond to threats against the country’s security and sovereignty.
Missile incident threatens fragile UAE-Iran thaw
The latest confrontation comes after more than two months of efforts by Abu Dhabi and Tehran to reduce tensions that had escalated following the US and Israeli war against Iran, which began on February 28.
During the conflict, Iran launched repeated missile and drone attacks against neighbouring Gulf states, including the UAE, accusing them of enabling US and Israeli military operations.
The UAE was among the Gulf states most heavily targeted, sustaining nearly 3,000 missile and drone attacks. Abu Dhabi also carried out scores of strikes against Iran, taking a more hawkish position towards Tehran than several of its Gulf neighbours.
Tensions later eased after Washington and Tehran reached a memorandum of understanding in June. However, the agreement began to unravel in early July, after which Iran shifted much of its military focus towards Bahrain, Kuwait and Jordan.
In recent months, the UAE had sought to rebuild diplomatic and economic channels with Iran while maintaining close military ties with Israel and the United States. Emirati officials have repeatedly said they want to avoid being drawn further into a wider regional conflict.
That balancing act is now under renewed pressure following the latest missile incident.
Strait of Hormuz tensions add to pressure
The confrontation also comes amid escalating tensions around the Strait of Hormuz, a crucial route for global oil and natural gas shipments.
Earlier this month, the UAE accused Iran of attacking ships operated by Abu Dhabi National Oil Company in the strategic waterway. Tehran has also maintained restrictions on traffic through the strait while issuing increasingly aggressive military rhetoric.
A separate maritime incident was reported on Tuesday when an unidentified projectile struck a ship as it sailed out of the Strait of Hormuz off the coast of Oman. The United Kingdom Maritime Trade Operations centre said the strike damaged the vessel’s engine room and caused one casualty, while the Omani Coast Guard assisted other crew members.
Another cargo vessel was struck by multiple projectiles about 40 nautical miles (74 kilometres) southeast of Mokha in Yemen and was declared a “constructive total loss”, according to the British maritime monitoring agency. The agency did not identify the projectiles or those responsible.
The incidents have added to concerns over the safety of commercial shipping through the Strait of Hormuz and the wider Red Sea region, both vital routes for global trade.
Trump tensions with Oman over Iran deal
The maritime crisis has also drawn Oman into a dispute between Washington and Tehran over arrangements for shipping through the Strait of Hormuz.
US President Donald Trump threatened Oman after becoming dissatisfied with an emerging agreement between Muscat and Tehran aimed at managing ship traffic through the strategic waterway, according to two regional officials cited by The Associated Press.
The officials said the Trump administration objected to parts of the proposed agreement, including joint Iranian and Omani management of the exit route from the strait and voluntary fees on vessels linked to security and maritime environmental protection.
Trump on Monday threatened to bomb Oman as it worked with Iran on an agreement intended to reopen the strait and potentially allow Washington and Tehran to resume negotiations aimed at ending the conflict.
He later posted a map on social media depicting the Strait of Hormuz as US territory. Trump had previously floated the idea during an Oval Office exchange, saying he liked the idea of declaring it a territory, without providing further details.
The White House referred to Trump’s earlier Oval Office remarks when asked about the latest comments and declined to provide additional details.
Iranian Deputy Foreign Minister Kazem Gharibabadi responded to Trump’s remarks on social media, accusing the US president of being delusional about the status of the Strait of Hormuz.
Trump has previously threatened Oman over its dealings with Iran. In May, he told reporters during a Cabinet meeting that Oman “will behave just like everybody else, or we will have to blow them up.”
Iran says Strait will not reopen yet
Iran has maintained that the Strait of Hormuz will not fully reopen until Washington meets its conditions, including commitments related to sanctions, frozen assets and military operations.
Iranian parliamentary speaker and former US-Iran negotiator Mohammad Bagher Qalibaf said the strait would remain closed until the United States fulfilled its commitments under the agreement, including lifting the blockade, releasing frozen assets, lifting oil sanctions and ending military operations.
Trump, however, said on Tuesday that the United States had no planned talks with Iran and insisted that the strait was “open and operating”, despite limited maritime traffic and reports of fresh attacks.
He also said the US blockade of the waterway remained “in full force and effect” and claimed that all water mines had been removed.
Egypt has backed the Iranian-Omani negotiations, saying an agreement could help create conditions for Washington and Tehran to return to talks.
The Egyptian Foreign Ministry said the agreement could pave the way for a “comprehensive and permanent deal that addresses all concerns and enhances regional security and stability”.
The latest developments leave the UAE facing renewed security pressure. Its decision to suspend economic ties with Iran threatens to derail a fragile diplomatic thaw, while tensions around the Strait of Hormuz and wider regional military activity continue to intensify.
