UAE Suspends Trade With Iran Following Antiship Missile Strike

Jebel Ali is a hub for container freight to and from Iran (DP World file image)

After weeks of attacks on its oil shipping interests, the United Arab Emirates has decided to suspend all trade with Iran, including financial transactions. The decision has significant ramifications for the smuggling and money-laundering networks that keep Iran's government running, as many of these operations conduct transactions within the UAE's opaque "free zones."

The UAE's response follows a reported round of Iranian ballistic missile attacks, launched Tuesday at targets in or near the Emirates. "UAE air defenses detected two ballistic missiles launched from Iran toward the country, with the first falling outside the country's territorial waters, while the second fell within the territorial waters," the country's defense ministry said. "Assessments carried out showed that the two ballistic missiles detected coming from Iran were targeting maritime navigation and fell into the sea."

Iran has denied involvement with a missile launch towards the UAE on Tuesday, though it has carried out dozens of similar attacks in months past. Iran possesses antiship ballistic missile systems, and had an opportunity to test them in combat service during the Red Sea crisis, when Iran-backed Houthi rebels used the technology repeatedly to target Western shipping interests.

While a small-scale, failed ballistic missile strike may seem like a comparatively minor provocation, Iran has struck at least 19 vessels affiliated with UAE state oil company Adnoc since the start of the conflict. Adnoc has been the most active GCC oil-shipping player still using the non-Iranian side of the Strait of Hormuz, making it a prime target for the Islamic Revolutionary Guard Corps (IRGC), which has deeply-held ambitions to control the waterway as a strategic asset.

Recent Iranian drone strikes on Adnoc tankers have had comparatively little effect on traffic. An ASBM strike would arrive on a near-vertical trajectory at high velocity, and could be expected to produce substantial damage.

The UAE's decision to suspend trade with Iran marks a second round of clamp-downs after a thaw in July. Shipping between the two countries slowed to a trickle amidst the first two months of intense hostilities, but cross-Gulf trading from the Emirates to Iranian ports returned to higher volumes last month.