UAE suspends Iran trade as Strait of Hormuz traffic remains severely reduced

UAE trade suspension

The United Arab Emirates suspended all trade, commercial exchanges and financial transactions with Iran until further notice on August 19. The measure affects a major Iranian trading channel: WTO data show the UAE supplied $21.0 billion, or 30.6%, of Iran’s merchandise imports in 2024, and bought $7.16 billion, or 12.8%, of its exports. The suspension could constrain Iranian imports, exports, payments and re-export trade if it is enforced across banks, free zones and commercial networks. WTO trade data

The UAE announced the suspension after saying it detected two ballistic missiles launched from Iran on August 18 that it assessed were aimed at maritime traffic; both fell into the sea. Iranian Foreign Ministry spokesperson Esmaeil Baghaei denied that Iran launched the missiles. No publicly cited independent investigation had established responsibility.

Shipping remains limited

The United States and Iran gave conflicting descriptions of the Strait of Hormuz on August 18. President Donald Trump said the waterway was open and operating, while Iran said it would remain closed until Washington met Tehran’s conditions. Vessel movements indicate that some traffic continued while commercial transit stayed sharply constrained.

Kpler recorded five commodity vessels transiting on August 15 and none on August 16, compared with 31 the previous weekend. Reuters reported that traffic on August 19 was unchanged from August 18 and remained far below prewar levels. Associated Press reporting and Reuters reporting support a description of restricted passage rather than a complete halt or normal operations.

The U.S. Energy Information Administration estimated that oil flows through Hormuz fell from 21.6 million barrels per day in the fourth quarter of 2025 to 4.9 million barrels per day in the second quarter of 2026. LNG flows fell from 10.5 billion cubic feet per day to 0.8 billion cubic feet per day. EIA cautioned that degraded AIS vessel data after February 2026 make current estimates subject to revision. EIA’s August assessment also identifies shipping disruption as a continuing energy-security risk.

Diplomacy and market effects

Iranian Foreign Minister Abbas Araghchi said negotiations with Oman on shipping arrangements were continuing. Iran has linked reopening the strait to an end to the U.S. blockade and sanctions, the release of frozen assets, compensation and an end to military threats. The practical terms of any arrangement, including shipping lanes, inspection authority and sequencing, remained unresolved.

The June 17 Islamabad Memorandum of Understanding set a maximum 60-day period, extendable by mutual consent, for negotiating a final agreement. No extension or final agreement had been announced by August 20. Pakistan’s Foreign Ministry confirmed the memorandum’s signing and Pakistan’s mediation role, while descriptions of the arrangement as a temporary ceasefire remain contested because its reported terms also referred to ending military operations and negotiating a final agreement. Pakistan’s June 21 statement

Oil prices rose as shipping and diplomacy remained unsettled. Brent October futures reached $94.06 a barrel and September WTI reached $87.67 on August 20, their highest levels since July 24 and their fifth consecutive daily gains. Continued threats to vessels can sustain higher freight, insurance and security costs even when individual ships are able to transit. Reuters’ August 20 market report linked the move to Middle East supply concerns.