Key insights
- Escalating tensions between the UAE and Iran raise geopolitical risks in the Middle East. Iran's warning of a 'crushing response' to any action from the UAE introduces uncertainty. This could negatively impact oil prices and increase risk aversion, potentially leading to a minor sell-off in US equities.
May 6 (Reuters) - The United Arab Emirates said on Wednesday that its ties and its international and defense partnerships were a "purely sovereign matter," rejecting an earlier statement by Iran saying that Abu Dhabi’s cooperation with the U.S. threatened Iran’s security and national interests.
The UAE’s foreign ministry said the Gulf country reserves its full sovereign, legal, diplomatic and military rights to address any "threat, allegation or hostile act".
The intensified spat between the two countries come after the UAE reported being attacked in the past days by Iran after four weeks of relative calm since the ceasefire was announced by the U.S. Iran denied carrying out operations against the UAE in recent days, yet warned of a "crushing response" if any action was launched from the UAE against Iran.