Israel-Iran War Disrupts UAE, Iran Trade Amid Global Economic Risks

The Israel-Iran conflict in mid-2025 has significantly pressured the United Arab Emirates' business environment, particularly affecting Dubai’s non-oil private sector with slowed sales and weakened tourism, as reflected in a modest rise in the UAE’s Purchasing Managers’ Index to 53.5 in June, indicating cautious demand and growth. Dubai, often seen as a stable commercial hub in the Gulf, recorded its lowest non-oil PMI in nearly four years due to increased competition and regional tensions undermining new business. Meanwhile, Iran’s trade infrastructure showed resilience during the conflict, with maritime, rail, and road transport largely unaffected, though air trade—which makes up a small portion—experienced greater disruption; a slight decrease in trade volume is anticipated but not yet fully quantified. Iranian businessman Reza Khosravni described the real damage as broken partnerships and frozen goods, with international clients suspending operations out of fear of secondary sanctions, severely impacting logistics and insurance costs. Despite the geopolitical turmoil, global oil markets demonstrated resilience as Iran refrained from closing the critical Strait of Hormuz, and ample spare capacity from OPEC+ and other producers kept prices from sustained spikes, reflecting a market adaptation to conflict-related risks. This situation highlights the delicate balance between regional instability and economic endurance in the Gulf and beyond amid ongoing Middle Eastern tensions.