Oil prices declined in early trading on Friday, breaking a five-day streak of increases, following an announcement by the United States regarding its forthcoming economic sanctions on Iran set to be revealed on Monday.
Brent crude futures fell by 34 cents (0.4%) to $93.44 per barrel by 06:46 GMT while West Texas Intermediate crude futures decreased by 44 cents (0.5%) to $86.76.
Over the past week, both benchmarks have risen by more than 5% but have seen a nearly 1% decline over the last three months.
‘Economic Warfare’
A press conference is scheduled for Monday where the U.S. will outline details of what Treasury Secretary Scott Bessent referred to as the new “economic warfare” against Iran.
These sanctions are described by the U.S. government as the most stringent in history, designed to function similarly to sanctions previously imposed on Cuba and Venezuela.
The Iranian foreign ministry has condemned the proposed sanctions.
UAE Halts Trade
In response to the escalating tensions, the UAE has halted all trade activities, commercial exchanges, and financial transactions with Iran until further notice.
Traffic through the Strait of Hormuz has plummeted, with only seven vessels, none carrying crude oil or LNG, transiting the critical waterway on Thursday.
This represents a significant reduction, as the strait previously accounted for approximately 20% of global oil and LNG supplies prior to the conflict that escalated on 28 February.
Financial Repercussions are Significant
The financial dimension is equally significant as Iran relies on the UAE as a vital commodity market (fuel and agriculture).
Dubai has long served as a hub for Iranian exchange houses, trading companies and intermediaries that facilitate cross-border transactions despite Iran’s limited access to the global financial system.
Before the war, the UAE was therefore Iran’s largest supplier of goods and its third-largest destination for non-oil exports before China and Iraq.
U.S. sanctions targeting Iranian oil, petrochemical and procurement networks have repeatedly designated UAE-based companies and individuals over alleged roles in facilitating transactions on Tehran’s behalf.
A broad and sustained UAE crackdown would therefore affect more than the movement of physical goods. It could also disrupt the financial, logistical and commercial networks Iran has relied on for years to navigate international isolation.
Gulf Markets React
Gulf stock markets exhibited mixed results on Thursday.
The Saudi market saw a 0.3% rise, buoyed by gains from miner Maaden, while Abu Dhabi’s benchmark increased by 0.7% with investment conglomerate IHC climbing nearly 2%.
Yet the Dubai market closed slightly lower, impacted by a decline in toll operator Salik.
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