Iran relies heavily on UAE as trade with Emirates skyrockets

Iran, located in the Middle East, has significantly increased its trade with the United Arab Emirates since the U.S. reimposed sanctions after withdrawing from the Joint Comprehensive Plan of Action. Notably, Emirati exports to Iran have skyrocketed from under $6 billion to $22 billion over the past seven years, highlighting the UAE's role as a crucial trading partner. Despite the increase in exports, the UAE remains Iran's largest buyer of fuel oil and a major customer for liquefied petroleum gas. Conversely, while Iran's non-oil imports from the United Arab Emirates saw a modest growth of only 20 percent since the sanctions, this still exceeded $7 billion. The overall dynamics of trade between the two countries indicate a stark contrast to Iran's trade relationship with China, where Iran enjoys a trade surplus. Last year, Iran's trade surplus with China totaled around $60 billion primarily through exports of oil and non-oil goods. The complexity of the trade arrangement arises from the fact that Iran imported over 100 tons of gold valued at $8 billion, with 10 percent sourced from the UAE while exporting to it only $3 billion in fuel oil and $7 billion in non-oil goods. This creates a significant trade imbalance where Iran’s imports from the UAE dwarfed its exports, leading to questions about how Iran finances the imports and manages foreign currency transfer, particularly given its exclusion from the global banking system due to sanctions. Moreover, while the United States and the UAE's bilateral trade was less than $35 billion last year, Iran's trade with the UAE approached similar figures. There is speculation regarding whether agreements on arms and other sectors between the UAE and the U.S. might influence the UAE's approach to trade with Iran. Caution is advised, as the sensitive geopolitical environment makes it challenging to navigate these fiscal relations.