The US and the UAE are moving to cut Iran off from Dubai, the offshore hub that has kept Tehran's sanctions-hit economy connected to global trade for decades. Washington has launched "Operation Economic Outcast" while Abu Dhabi suspends commercial ties, but China's oil reserves are cushioning Tehran's main trading partner from the fallout.
Dubai's Iranian trade dries up
Trade between the UAE and Iran, worth nearly $30 billion a year before the war, has slowed sharply since Iran fired missiles toward the UAE last week, straining the offshore hub that has given Tehran's sanctions-hit economy access to global banking and markets for decades.
Shipping along Dubai Creek, the historic route for dhows ferrying goods to Iranian ports, has thinned out. According to the Financial Times, Iranian shopkeeper Danial said: "We have no income, yet we still have to pay rent." Saffron prices in Dubai's old souk have risen more than one-fifth as Iranian traders switch to carrying smaller shipments in personal luggage.
Washington's "economic D-Day"
The pressure follows Trump's declaration of a new campaign of "economic warfare" against Iran, launched as "Operation Economic Outcast" to expand secondary sanctions against firms trading with Tehran. The UAE, which has absorbed almost 3,000 Iranian missiles since the war began, had suspended all trade, commercial exchanges and financial transactions with Iran a day earlier.
Yet merchants on both sides say they are adapting rather than stopping. Some shipments have been rerouted through Oman, and cargo can still leave Dubai for Iran's Bandar Abbas port by entering fake destinations on shipping documents, according to a Tehran-based businessman cited by the Financial Times, who said he has also stockpiled goods in Turkish warehouses in case the UAE route closes again.
China's reserves blunt the pressure
While the UAE squeezes Iran's trade routes, China's crude oil stockpiles are limiting the war's impact on global energy markets. Beijing holds an estimated 1 billion to 1.4 billion barrels in reserve, equal to roughly 120 days of imports, letting it cut purchases without running short.
As a result, China's crude imports fell 23% between March and July compared with a year earlier, easing competition for supplies disrupted by the conflict. Beijing has also cut refined-fuel exports, with gasoline shipments down 93% year-on-year in the second quarter. Still, the strategy carries a cost at home: Macquarie estimates the oil and petrochemical sector drove 90% of the slowdown in China's second-quarter industrial output.
Sources: Financial Times, Investing.com
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