Israel-Iran Conflict: Its Effects on UAE

Israel-Iran Conflict Impacts: Effects on UAE Residents

Geopolitical tensions in the Middle East, especially the military conflict between Israel and Iran, may not directly impact residents of the United Arab Emirates, but their indirect economic effects are already being felt. The global oil market, precious metal prices, air travel, and the prices of imported consumer goods are all in flux, directly impacting everyday life.

Rising Fuel Prices

One of the most noticeable changes can be seen in fuel prices. Following the attacks initiated by Israel on Friday, the global oil price increased by 14 percent. The price per barrel for WTI and Brent crude oil showed a growth of over 7 percent over the weekend. Since the UAE deregulated fuel prices in 2015, they change monthly in accordance with international oil market trends.

During the conflict, oil infrastructure has also become a target, potentially leading to further supply disruptions and even higher prices next month. This increase may be particularly uncomfortable for those who drive daily.

Rising Gold Jewelry Prices

In uncertain economic and political situations, gold has always been a "safe haven" asset. This remains true, with the price of gold sharply increasing due to war-related tensions. In Dubai, the price of gold has risen by nearly 5 dirhams per gram, with 24-carat gold reaching 413.5 dirhams per gram.

This could be particularly inconvenient for those who like to purchase gold jewelry during their summer vacations, whether locally or abroad. The current high prices could dampen demand, although many still view gold as a secure investment.

Aviation Disruptions and Costly Airfares

The closure of regional airspaces also has a tangible impact. Due to the closure of airspaces in affected countries, including Iran, Iraq, Israel, and Jordan, flights must take detours, resulting in delays, cancellations, and increased costs.

UAE airlines, including Emirates and flydubai departing from Dubai, have already suspended certain flights and significantly rerouted others. Due to the tense situation, many passengers have postponed their travels. After the conflict resolves, the sudden surge in travel demand could cause airfares to sharply rise, particularly to affected destinations.

Rising Consumer Goods Prices

The UAE imports several products from countries directly or indirectly affected by the conflict. Iran, for example, exports minerals, organic chemicals, vegetables, fruits, salt, dairy products, carpets, and fertilizers to the UAE.

The disruption of logistics routes, border closures, and flight restrictions may cause these products to arrive late, or not at all, leading to price increases and occasional shortages on store shelves.

Summary

While the Israel-Iran conflict does not directly affect UAE residents, its economic impacts are not going unnoticed. The prices of fuel, gold, airfare, and some consumer goods may rise, requiring increased vigilance from the population. Dubai remains a stable and safe environment, yet the movements of the global market are noticeably felt at the local level.

(Source: Based on analyst information.)