The UAE has suspended all trade, commercial exchanges and financial transactions with Iran until further notice, citing regional escalation that it says threatens peace and security, after Iranian ballistic missiles targeted maritime navigation in the region.

The Foreign Affairs Ministry announced the suspension following confirmation by the UAE Defence Ministry that two ballistic missiles launched from Iran were detected on Tuesday, both of which fell into the sea. It was the first Iranian strike on the Emirates since an attack on Fujairah port in early May.

The UAE has blamed Iran for targeting at least three Adnoc-linked vessels transiting the Strait of Hormuz since the start of last week, part of a broader pattern in which more than 15 vessels have been attacked since the war began. Iran's foreign ministry dismissed the accusations as "baseless."

The escalation has effectively buried hopes of a near-term diplomatic resolution. President Donald Trump confirmed on Tuesday there were "no talks or conversations going on, or scheduled, with the Islamic Republic of Iran," adding that a naval blockade remains in full force. Iran's Supreme National Security Council secretary Mohsen Rezaei said on social media that the gap between "America's inability to reopen the Strait of Hormuz and its claim to own it is greater than the 7,000-mile distance between Washington and the strait itself."

Oil prices rose for a fourth consecutive session on Wednesday on the back of the deteriorating outlook. Brent crude futures climbed 0.9% to $91.82 a barrel, while US West Texas Intermediate rose 1% to $85.75. Both benchmarks are up more than 5% over the past five days, reaching their highest levels since July 24.

Strait of Hormuz traffic remains severely constrained. Six vessels crossed on Tuesday, down from nine the previous day and below the 10-day daily average of 11. An interim peace deal signed on June 17 has failed to hold, and a separate navigation agreement reached between Iran and Oman this month has not been finalised.

Regional equity markets were largely steady. The Saudi benchmark closed flat, Dubai's index edged higher on the back of a near 2% rise in Emirates NBD, and Abu Dhabi's index gained 0.2%, its fifth consecutive session of gains, supported by Abu Dhabi Islamic Bank and telecoms group e&.

Malaysia recorded a sharp decline in crude oil imports in March as cargo arrivals from the Gulf whittled down due to the closure of the Strait of Hormuz. 

Crude oil imports from the Gulf region fell 66% on the previous month, after recovering in April supported by a rise in imports from West Asia, the Red Sea and other Southeast Asian countries, according to Lloyd’s List Intelligence. 

Iran’s closure of the Strait of Hormuz has cast a critical spotlight on the waterway, through which a fifth of the world’s oil transits. Nearly 15 million barrels per day (mb/d) of crude oil, equalling 34% of global crude oil trade, passed through the strait last year, according to the International Energy Agency.

Vast majority of the crude oil transiting the waterway was destined for Asia, with China and India receiving a combined 44% of these exports. 

Meanwhile, around 20 mb/d of oil – including crude oil and products – transited the strait in 2025, the agency said. 

The Strait of Hormuz logged increased maritime traffic between July 27 and August 2, with 84 transits up from 45 recorded in the previous week, according to data shared by the maritime data and intelligence company. Non-Iranian-linked traffic also rose modestly as containerships and gas carriers resumed trackable transits.  

The Islamabad Memorandum of Understanding signed between the US and Iran in June granted relief to vessels stranded in the Gulf, reducing trapped mainstream tankers from more than 160 to just 29.

Its collapse last month, however, left a new clutch vulnerable with 65 ships that entered during the MoU period yet to leave the region. 

“Owners and operators remain reluctant to send ships through Hormuz amid continued uncertainty,” Lloyd's List added. 

The US is maintaining its blockade of Iranian ports, with 45 merchant ships having been redirected, two vessels disabled, and two boarded.  

Iran’s Foreign Ministry spokesman said on Wednesday that talks between Tehran and Muscat on the strait have entered their final stage. The negotiations also include plans to establish a new middle corridor in the strait as well as include a service fee. 

Iran is looking to charge transiting between 5%-7% of the price of their cargoes, Reuters reported, citing a senior Iranian official. Oman is discussing fees of around 3%, while Washington is sticking to a no-fee policy.

Saudi Arabia has recorded its first quarterly contraction since the second quarter of 2024 and its steepest decline since the second quarter of 2020, as the US-Iran conflict continues to disrupted shipping activity and weigh on regional economies. 

Saudi’s gross domestic product slid 4.8% from April through June this year, driven by a 24.7% decline in oil activities, according to flash estimates issued by the kingdom’s General Authority for Statistics.

The oil sector slump and widespread implications of the regional conflict have triggered a sharp reversal from  3% growth logged in the previous quarter.   

Oil activities, which include extraction and refining of crude oil and natural gas, contributed negatively to real GDP growth by 5.4 percentage points. The overall decline was partially offset by a nominal rise in government (0.9%) and non-oil activities grew (0.6%).

Seasonally adjusted real GDP also decreased 4.9% quarter-on-quarter in Q2, led by a 21.5% slump in oil activities.

The estimate comes on the heels of the International Monetary Fund’s 2026 Article IV consultation report issued Wednesday, extoling the Gulf’s largest economy on its economic resilience during the current conflict, backed by strong fundamentals, diversified oil and logistics infrastructure. 

The IMF projected the kingdom’s economy to expand by 1.7% in 2026, against a 1.1% prediction in its World Economic Outlook report issued earlier this month. The fund’s growth projections for next year remained unchanged at 5.5%.

Saudi Aramco shuttered its 400,000-barrel-per-day Jazan refinery on July 27 following damage from an attack, according to a Reuters report.

The facility, which sustained damages to its integrated gasification combined-cycle complex and an oil storage area, is expected to resume operations by August 15.  

Aramco share price fell 1% on July 28, closing at 26.3 Saudi riyals, shedding 0.26 Saudi riyals per share from the previous day’s close of 26.56 Saudi riyals. 

Inflation is expected to rise modestly to 2.2%, the IMF has said, with higher shipping and insurance costs partly offset by subdued rent inflation and price caps on some fuel and food items. 

A modest reduction in the non-oil primary deficit is appropriate in 2026, it added, while backing fiscal consolidation and Vision 2030 reforms for sustained growth and diversification. 
 

The UAE's free trade negotiations with the European Union are advancing more slowly than talks with other partners, with the bloc's insistence on including non-trade issues identified as the key obstacle, the country's foreign trade minister has said.

The seventh round of negotiations with the EU has concluded, minister Thani bin Ahmed Al Zeyoudi said this week, adding that the EU's approach of linking trade deals to corporate sustainability reporting and labour standards "will not work with us." Several other countries, including the US, have raised similar objections to the EU's stance.

"The slow pace stems from the EU insisting on including non-trade matters," Al Zeyoudi said, a position that has drawn criticism from multiple trading partners engaged in separate negotiations with Brussels.

The comments came as Al Zeyoudi confirmed the UAE is continuing talks with at least 20 countries on comprehensive economic partnership agreements (CEPAs). Negotiations with Rwanda, Ghana and Zambia have reached their final stages, while talks with Bangladesh and Peru are making good progress.

The UAE has concluded 37 CEPAs to date, 18 of which are already in force. Non-oil foreign trade rose 13% year on year in the first half of 2026 to $517 billion, despite four months of geopolitical disruption stemming from the US-Israeli war with Iran. Non-oil trade with fully implemented CEPA partners reached $82.7 billion, including $52.8 billion in imports and $18 billion in non-oil exports.

Al Zeyoudi also said the UAE is working to develop logistics infrastructure and trade corridors to strengthen resilience against global supply chain disruptions.

The United States and Saudi Arabia have signed a civil nuclear cooperation agreement that would allow the kingdom to enrich uranium domestically and use American technology to develop its nuclear programme, in a deal that stops short of the safeguards typically required to prevent weapons proliferation.

The agreement, known as a 123 Agreement, does not include the gold-standard non-proliferation provisions found in comparable accords, nor does it require Saudi Arabia to adopt the International Atomic Energy Agency's additional protocol, which grants inspectors broader powers to investigate undeclared nuclear activity. The deal must pass a 90-day congressional review before entering into force.

The Department of Energy described the pact as a peaceful nuclear cooperation agreement that will create a decades-long, multibillion-dollar partnership. However, President Donald Trump cast doubt on its future shortly after signing, saying the deal would be conditional on Saudi Arabia joining the Abraham Accords to normalise ties with Israel — a step Riyadh has said it will not take without a credible roadmap to Palestinian statehood.

The agreement is understood to permit Saudi Arabia to enrich uranium domestically and reprocess spent nuclear fuel. Saudi Arabia has long maintained it will not sign the IAEA's Additional Protocol, citing national sovereignty — a position that analysts say aligns with the current US administration's scepticism of intergovernmental bodies.

Saudi Arabia's energy minister, Prince Abdulaziz bin Salman, has previously stated that the kingdom intends to use its domestic uranium resources across the entire nuclear fuel cycle and ultimately export uranium products. Some experts question whether a nuclear programme is necessary given Saudi Arabia's existing energy assets.

The timing of the agreement raises additional questions as the US - Iran conflict, which was based on Trump's insistence on preventing Iranian nuclear weapons development, continues. 

Gulf states have explored nuclear energy for decades, but only the UAE has operationalised a plant. The Barakah facility in Abu Dhabi, which came online in 2020, now supplies around a quarter of the country's electricity, though a drone strike in May damaged an electrical generator just outside its inner perimeter.