Dubai's Iranian traders keep goods moving as UAE trade suspension bites

eNCA reports that Iran’s economic ties to Dubai are proving hard to break despite the war, with Iranian merchants in the emirate’s old markets still sourcing goods across the Gulf. You can read the original report here.

The United Arab Emirates announced last month that it was suspending trade and financial exchanges with Tehran. Iran has responded to American attacks by targeting the US-allied country and tightening its grip on the Strait of Hormuz.

In the markets of old Dubai, saffron, cumin, pistachios and almonds from Iran still fill the stalls. Morteza Asaadi, who runs a grocery store his father founded in 1963, told the outlet that certain Iranian products have become scarcer and others have seen prices soar, but that most traditional foodstuffs such as nuts and zereshk, the small red berries used in Persian cooking, remain available. Asked how the goods are still arriving, he said simply that they are coming, without explaining the route.

Two wholesalers, who spoke on condition of anonymity, said they are still sourcing from Iran, notably through Omani ports. One said the Emirates can no longer export to Iran, but certain goods can still be brought in.

At a saffron shop in the emirate, the spice arrives by air from Mashhad in north-eastern Iran, after a brief interruption in air links was resolved.

A community that has weathered this before

Dubai is home to a large Iranian community, estimated at several hundred thousand people, which has contributed to the emirate’s commercial development and lived through earlier periods of tension with Tehran.

Mehran Haghirian of the London-based Bourse & Bazaar Foundation told the outlet that after the United States tightened sanctions against Iran in 2012, Iranians in Dubai persuaded their partners in Abu Dhabi that trade should continue regardless of sanctions because it was contributing to the UAE economy.

The numbers behind that argument are large. In 2024, the UAE was the main entry point for goods into Iran, accounting for more than 30 percent of imports worth $21 billion, according to the World Trade Organization. It was also Iran’s third-largest customer, absorbing nearly 12 percent of its exports, worth more than $7 billion.

Dubai is an important financial hub for Iranian businesses. Washington has accused it of being a key node in financial networks used to circumvent sanctions. At the end of August, as part of its policy of economic pressure on Iran, the United States announced new measures targeting Iran’s trading partners and sanctioned the director of the Dubai branch of Iran’s Bank Melli. The institution continues to welcome clients. An employee at one of its two Dubai branches told the outlet that the bank has been under sanctions for years.

What Abu Dhabi is signalling

Haghirian said Abu Dhabi’s announcement is part of an effort to bring Tehran back to the negotiating table and to show alignment with the United States. He said it will not necessarily cut informal flows between private actors, which are deeply rooted on both sides of the Gulf, and that a lasting rupture could weigh on Dubai’s economy because a large chunk of trade cannot easily be replaced.

Emirati businessman and former senior official Nasser al-Shaikh downplayed those concerns at a conference in Dubai, saying Iran is no longer as important to the emirate’s economy as it was a few years ago. He conceded the relationship was mutually beneficial, but said that in times of war priorities change and national security comes first.

In his shop in Bur Dubai, Asaadi said he is convinced the trade will survive the current crisis. Gesturing at the Gulf that separates the UAE from the coasts of southern Iran, he said water can break a mountain.

What it means from here

For South African importers, the Gulf is not a distant story. Dubai and the wider UAE are a major transshipment point for goods moving between Asia, the Middle East and southern Africa, and a disruption in that corridor shows up in freight rates, insurance premiums and lead times before it shows up on a shelf.

The products in question are the same category South African buyers know well. Dried fruit, nuts, spices and rice move through Gulf ports in volume, and any rerouting through Omani ports or by air instead of sea adds cost at each step. South African retailers and wholesalers who source through Dubai will see that in landed prices rather than in headlines.

The UAE has not reversed its suspension, and the United States has continued to add measures targeting Iran’s trading partners. The next dated step is the effect of those August measures, which take time to bite through banking channels. For now, the merchants in old Dubai are still trading, and the question for this part of the world is how long the routes hold and what they cost when they change.