Iran‑UAE trade ties persist despite war, keeping oil market risk alive
Even after the UAE announced a suspension of formal trade with Iran, informal flows of Iranian commodities and finance continue through Dubai, sustaining regional economic links and keeping geopolitical risk on oil and currency markets.
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Desk Analysis
How This Affects the Exchange
Sector Effect
Negative · Do not buy
Oil & Gas and Market risk sectors face heightened geopolitical tension, so avoid related stocks.
Sectors & Direction
Desk read
Desk call: Do not buy · Negatively affected
- Oil & GasNegatively affected
- MarketsNegatively affected
- EconomyNegatively affected
Companies
Mentions in This Briefing
Sectors: Oil & Gas, Markets, Economy — Negative · Do not buy. PSX tickers: OGDC, PPL. Oil & Gas and Market risk sectors face heightened geopolitical tension, so avoid related stocks.
Full Story
Open on Business Recorder## Background
The United Arab Emirates announced last month that it would suspend official trade and financial exchanges with Iran in response to the ongoing conflict and U.S. pressure. Despite the formal suspension, Iranian merchants in Dubai report that their businesses remain active, sourcing goods such as saffron, nuts and pistachios through alternative routes, including Omani ports and air cargo from Mashhad.
## Ongoing informal trade
Two unnamed wholesalers confirmed they still import Iranian products, while a long‑standing grocery store in Deira, run by the Asaadi family since 1963, continues to receive Iranian saffron by air after a brief interruption. The Iranian community in Dubai, estimated at several hundred thousand, underpins these informal networks.
## Economic significance
In 2024, the UAE was the main conduit for Iranian imports, accounting for over 30 % of Iran’s $21 billion worth of imports and about 12 % of its $7 billion exports, according to WTO data. Dubai also serves as a financial hub for Iranian businesses, a point highlighted by U.S. accusations that the emirate helps circumvent sanctions.
## Geopolitical context
The United States introduced new sanctions at the end of August, targeting Iran’s trading partners and even sanctioning the director of the Dubai branch of Iran’s Bank Melli. Abu Dhabi’s suspension aims to pressure Tehran back to negotiations, but analysts say informal flows are unlikely to be halted quickly because of deep‑rooted private‑sector links.
## Market implications
While the formal break may marginally reduce official trade volumes, the persistence of informal channels suggests limited immediate impact on regional oil supply. However, the heightened tension around the Strait of Hormuz and the risk of further sanctions keep oil‑price volatility and PKR‑exchange‑rate risk elevated, which can affect investor sentiment on the Pakistan Stock Exchange.
## Outlook
Emirati officials acknowledge that Iran’s share of the UAE economy has declined, yet they also admit that a sudden, total cut‑off would be difficult and could hurt Dubai’s own economy. For Pakistani investors, the key takeaway is that geopolitical risk around oil and currency markets remains elevated, warranting caution on related PSX sectors.