Oil prices climbed sharply on Thursday as the UAE Iran trade suspension rattled markets and US President Donald Trump threatened what he called the most crushing economic operation ever mounted against any country. Brent crude futures rose 1.59% to $93.08 per barrel, while US West Texas Intermediate futures for September delivery gained 1.63% to reach $87.23.
The moves follow a turbulent 48 hours in the Gulf. The United Arab Emirates said on Wednesday it was halting all trade and financial transactions with Iran after saying it had come under missile fire from the Islamic Republic the previous day. The UAE said two ballistic missiles had been launched toward its territory. Iran’s foreign ministry spokesperson Esmail Baghaei denied the strikes.
What the UAE Iran trade suspension means for Tehran
The scale of the commercial rupture matters. According to TIME, the UAE accounts for 12.5% of Iran’s exports and 30.43% of its imports, making it one of Tehran’s most consequential trading partners. Losing that channel is not a minor inconvenience for an economy already under severe strain.
Iran’s economic position was fragile before this week’s events. The International Monetary Fund, according to KSL.com, forecasts inflation of nearly 70% in Iran this year alongside an economic contraction of 5.4%. Cutting off the UAE as a commercial lifeline pushes that picture considerably darker, and narrows the options available to Tehran if it wishes to stabilise its finances.
The decision to suspend trade heaps further pressure on a country already facing US economic sanctions, and it pushes the prospect of any renewed ceasefire agreement further from view.
Trump announces ‘economic warfare’ as talks stall
President Trump used a Truth Social post to frame Wednesday’s announcement as a direct consequence of Iran’s failure to reach a deal. ‘I am announcing the MOST CRUSHING ECONOMIC OPERATION EVER TAKEN AGAINST ANY COUNTRY! This will be Economic Warfare and Isolation on an unprecedented scale,’ he wrote.
He had, he said, given Iran an opportunity to negotiate. ‘TRAGICALLY, for them, they have failed to take it.’ Beyond Iran itself, Trump threatened ‘TREMENDOUS Economic Consequences’ for any country providing Tehran with a financial lifeline. That threat explicitly covers cash transfers, currency swaps and shipping registries.
The language was among the sharpest directed at Iran during the current standoff, and it arrived at a moment when the diplomatic path looks narrower than it has for some time.
A conflict that has already cost the UAE dearly
For the UAE, the decision to suspend trade carries its own weight. The country has been on the front line of the conflict since hostilities began. Le Monde reports that when the Middle East war began on 28 February, the UAE bore the brunt of Iran’s attacks, with nearly 3,000 missiles and drones directed at the country.
Against that backdrop, the suspension of trade can be read as a culmination rather than a sudden shift. The two ballistic missiles reported this week came after months of strikes, and the UAE’s decision to sever commercial ties represents a formal hardening of its position toward Tehran.
For global oil markets, the combination of a major Gulf state cutting ties with Iran, an escalatory presidential statement from Washington, and an increasingly isolated Iranian economy all point in the same direction. Traders moved prices higher, and analysts will now be watching whether further sanctions announcements from Washington follow the rhetoric.
Trump’s stated threat of penalties against third countries that continue to support Iran financially now places governments in Asia and Europe in a difficult position, with the president making clear that doing business with Tehran carries a cost.
