The United Arab Emirates has suspended all trade, commercial exchanges and financial transactions with Iran until further notice. The decision follows an alleged missile attack that has added to tensions between the two neighbouring countries. The UAE said the move came in response to regional escalation that threatens peace and security.

The UAE Ministry of Defence said its air defence systems detected two ballistic missiles launched from Iran towards the country. According to the ministry, both missiles fell into the sea. One landed outside the UAE’s territorial waters, while the other fell within the country’s territorial waters.

The missile incident has dealt a fresh blow to trade ties between Abu Dhabi and Tehran. The UAE said the latest regional escalation was undermining regional and international peace and security. It has therefore decided to halt economic and financial dealings with Iran until further notice.

The move marks a major deterioration in UAE-Iran relations after a period of relative calm. It also comes as tensions rise across the Gulf and around the Strait of Hormuz, one of the world’s most important energy routes.

The UAE has also placed its security forces on high alert. The Ministry of Defence said the country remained fully prepared to respond to any potential threats. In a post on X, the ministry said the first missile fell outside the UAE’s territorial waters, while the second landed within its territorial waters.

The ministry said it was prepared to respond firmly to any attempt to undermine the UAE’s security, sovereignty and stability. It also said it would protect the country’s national interests and capabilities. The ministry urged people to depend only on information released by official authorities and avoid rumours and misinformation.

Iran has rejected the UAE’s accusation that Tehran was behind the missile launches. Iranian Foreign Ministry spokesperson Esmaeil Baghaei, speaking early on Wednesday, called the UAE’s accusations baseless. Tehran has denied responsibility for the incident reported by the UAE a day earlier.

The latest dispute comes after a series of incidents involving UAE-linked shipping around the Strait of Hormuz. UAE state-run WAM has reported attacks on vessels belonging to Abu Dhabi National Oil Co. while they were travelling through the strategic waterway. Iran has not claimed responsibility for those attacks.

The suspension of economic ties comes at a sensitive point for diplomatic efforts in the region. A 60-day period agreed under a memorandum signed by Washington and Tehran in June ended on August 17 without a breakthrough. The 14-point memorandum was aimed at opening channels for technical talks to help end the wider West Asia conflict.

The discussions also included issues such as the reopening of the Strait of Hormuz. The UAE has repeatedly maintained that it wants to prevent further escalation in the region. However, the latest missile incident and Abu Dhabi’s decision to suspend trade with Iran have created another setback for efforts to reduce tensions.

US President Donald Trump said on Tuesday that there were currently no talks taking place or planned with Iran. His remarks came as tensions continued to grow across the Gulf.

The latest developments have increased uncertainty across the region. The UAE has strengthened its security posture while cutting trade and financial ties with Iran. The suspension will remain in place until further notice, marking a significant new stage in the strained relationship between Abu Dhabi and Tehran.