As the conflict between the United States and Iran intensifies, the United Arab Emirates (UAE)’s economy faces headwinds as core industries flounder. As the war intensifies, the market capitalization of Dubai and Abu Dhabi stock exchanges dropped $240 billion over the last month, according to Middle East Eye.

Where Saudi Arabia and Oman are seeing rising stock markets with higher oil prices, UAE’s economic model is more dependent on tourism, real estate and finance, with the ongoing conflict exposing economic vulnerabilities. Dubai’s main share index, DFMGI, dropped 0.5%, with a 4.9% drop in blue-chip developer Emaar Properties and its construction arm, according to Reuters. Emirates NBD Bank shares closed 0.4% down. Conversely, Abu Dhabi’s benchmark index, FTFADGI, increased 0.2%, with help from a 1% jump in Abu Dhabi Islamic Bank and a 0.4% rise in petrochemical maker Borouge.

“Anecdotal comments suggested that sectors ​such as tourism, retail and logistics were the most affected, ​whereas segments such as technology and construction signaled a softer, but still notable ‌impact,” ⁠said David Owen, senior economist at S&P Global Market Intelligence, per Reuters.

The UAE’s non-oil private sector activity expanded at its weakest rate in nearly four years, per Reuters, with the seasonally adjusted S&P Global UAE Purchasing Managers’ Index dropping 52.9 points in March, the lowest level since July 2025. Output and new growth have slowed considerably, with the output subindex dropping from 61.8 in February to 54.9 in March, the slowest growth since June 2021. Furthermore, business expectations over the next 12 months have dropped to the lowest level seen in the last five years.

With civilians in the UAE being targeted by Iranian missile and drone attacks, Dubai’s crown prince and UAE’s Defense Minister Sheikh Hamdan bin Mohammed Al Maktoum approved a 1 billion dirham business-stimulus package, the equivalent of $272.2 million, to support the economy during the period of strife, per the Wall Street Journal.

“Our message is clear: Dubai remains committed to supporting individuals, families and businesses with confidence and stability. With strong institutions and deep community ties, the emirate continues to grow, turning challenges into opportunities and emerging stronger than ever,” said Sheikh Hamdan, per the Wall Street Journal.

As the shutdown of the Strait of Hormuz continues to send shockwaves through global supply chains, the UAE joins the United States in the fight to force the trade route open, according to the Wall Street Journal. The nation is lobbying the United Nations Security Council to authorize this move alongside allies in Europe and Asia.

The UAE’s role in freeing the strait could potentially lead to more tension in the Middle East, leaving the nation in a risky position. “[The UAE] could step into this war only to face a more aggressive Iran, continue to absorb hits to critical infrastructure and potentially investor confidence, and then struggle to rebuild ties with its neighbor, particularly if Trump elects to declare victory before reopening the strait or crippling Iran’s missile and drone capabilities,” said Elizabeth Dent, a fellow at the Washington Institute for Near East Policy, per the Wall Street Journal.