Good morning, ladies and gents. The last time we wrote to you, it was the start of what has now blown up into an exchange of attacks between Israel and Iran that has killed hundreds in Iran and damaged energy infrastructure, and raised concerns of a more serious and wider regional conflict.

After Israel initiated the attacks on Tehran on Friday, killing several military leaders and nuclear scientists, violence escalated between the two countries, sending jitters through markets and hiking oil prices. Iranian threats to close the oil supply chokepoint Strait of Hormuz — potentially leading to the cutting off about 20% of the world’s daily oil supply — has deepened oil concerns further.

The UAE condemned Israel’s military targeting of Iran “in the strongest terms,” warning of the risks of further escalation and calling for immediate de-escalation in a Foreign Affairs Ministry statement. The ministry urged all parties to exercise maximum restraint and emphasized the importance of diplomacy, respect for sovereignty, and adherence to international law. The UAE also called on the UN Security Council to take urgent action to secure a ceasefire and safeguard regional stability.

Foreign Minister Abdullah bin Zayed Al Nahyan ramped up consultations with regional and international counterparts to help defuse tensions, state news agency Wam reports. The talks focused on the potential fallout from the Israeli strike and underscored shared support for dialogue as the only viable path forward.

The Foreign Minister’s recent calls included:

  • Iranian Foreign Minister Abbas Araghchi (Wam);
  • Qatari Foreign Minister Sheikh Mohammed bin Abdulrahman Al Thani (Wam);
  • Omani Foreign Minister Sayyid Badr Hamad Al Busaidi;
  • French Foreign Minister Jean-Noël Barrot;
  • UK Foreign Secretary David Lammy and Prime Minister Keir Starmer ;
  • Russian Foreign Minister Sergey Lavrov (Wam);
  • As well as counterparts from Saudi Arabia, Jordan, Iraq, Greece, Morocco, Kuwait, Cyprus, and Bahrain.

The escalation in violence has disrupted regional airspace, with five UAE-based carriers — Emirates, Etihad, flydubai, Wizz Air Abu Dhabi, and Air Arabia — cancelling flights and making route adjustments. The disruptions primarily affect routes to Iraq, Iran, Jordan, and Lebanon.

The timeline: Emirates has suspended all flights to Amman and Beirut until 22 June, with services to Tehran, Baghdad, and Basra halted until 30 June, according to a travel update. Etihad Airways has also canceled its route from Abu Dhabi to Tel Aviv until 22 June, while maintaining a reduced service to Amman and Beirut. Flydubai suspended flights to multiple destinations including to Israel, Syria, and Jordan, while Air Arabia halted its services to countries including Iraq and cities in central Asia. Wizz Air also cancelled journeys to Israel and Jordan.

OIL WATCH-

Opec sees no need for panic: Opec is pushing back against growing concerns over global oil supply, dismissing the need for emergency action as geopolitical tensions rise, Reuters reports. Secretary General Haitham Al Ghais said there is currently no disruption warranting market intervention, rejecting the International Energy Agency’s (IEA) warning as “false alarms” and “market fear,” Reuters adds, citing the Secretary General.

Market volatility: The Israel-Iran escalation of hostilities sent oil prices up by as much as 13% on Friday midday before settling up 7%. The IEA had earlier said it stands ready to tap its 1.2 bn barrel emergency reserves if the Israel-Iran conflict escalates and disrupts supply — a move Al Ghais said is “unwarranted” given market conditions. Brent Crude futures are now up around 2.3%, to USD 75.93 a barrel.

The rapid price increase is partly because the spare oil production capacity held by Opec and its allies is only about equal to Iran’s total output, raising concerns about the ability to cover a significant supply disruption, the newswire reported separately, citing statements from analysts and Opec watchers.

Only Saudi Arabia and the UAE have the immediate capacity to increase oil production, collectively able to add about 3.5 mn bbl / d, which is roughly equivalent to Iran’s current production of 3.3 mn bbl / d, of which over 2 mn bbl / d are exported, according to analysts and industry sources. Saudi Arabia is the only member with tangible, readily available barrels, one source said, dismissing the rest as “paper” capacity.

Looking ahead: “[Oil’s] ultimate landing point will likely hinge on whether Iran revives the 2019 playbook and targets tankers, pipelines, and key energy facilities across the region,” Reuters added, citing a note from RBC Capital Markets’ Helima Croft.

WEATHER- Temperatures in Dubai will reach an afternoon high of 43°C today, and an overnight low of 33°C. In Abu Dhabi, the mercury will peak, reaching an afternoon high of 35°C, though it will feel like 44°C, before cooling to an overnight low of 31°C.

WATCH THIS SPACE-

#1- World Bank lifts ban on nuclear funding: The World Bank will resume funding nuclear energy projects for the first time since 1959, the Financial Times reports, citing a note by World Bank’s President Ajay Banga. The bank will work in partnership with the International Atomic Energy Agency, the UN’s nuclear watchdog, to support nuclear projects in developing countries.

Initial efforts will focus on extending the lifespan of existing nuclear reactors in countries that already operate them, alongside upgrading power grids and supporting related infrastructure, supporting a projected surge in electricity demand across the developing world, FT said. Banga said annual investment in generation, grid, and storage infrastructure must rise to USD 630 bn, from USD 280 bn currently, to meet demand.

The bank also plans to back emerging nuclear tech, particularly small modular reactors (SMRs), to make them viable for wider development. SMRs are a flexible and potentially more affordable nuclear alternative, but they remain in early stages of commercialization.

Nuclear needs a lot of backing: Private sector capital will be key, but the World Bank will need to back it with tools like guarantees and equity, the FT added. The nuclear industry also needs a domino effect, where other multilaterals, including the Asian Development Bank, follow suit with funding. Government-backed, low-cost financing is essential to getting large-scale projects off the ground, given their high cost and risk.

More US involvement? The US — the World Bank’s largest shareholder — and other Western nations have been lobbying for the ban lift as it looks to level the playing field for Western firms competing with state-backed nuclear giants from Russia and China, which are developing nuclear infrastructure in developing countries.

#2- First eVTOL test flight done in Abu Dhabi: The Abu Dhabi Investment Office — in partnership with Chinese autonomous aerial vehicle firm EHang and Multi Level Group (MLG) — conducted a test flight for its first passenger electric vertical take-off and landing (eVTOL) aircraft, according to a statement. The aircraft — dubbed EH216-S — is the first two-seat vehicle of its kind and is tailored to offer a variety of uses, including tours, short trip, and recreational mobility.

Abu Dhabi’s is prepping for the future: AD Ports Group, Falcon Aviation Services, and Archer Aviation are designing the country’s first hybrid heliport at the Abu Dhabi Cruise Terminal in Zayed Port after receiving legislatory approval back in April. Archer Aviation will bring its Midnight eVTOL aircraft to high-traffic areas in Abu Dhabi in a move funded by Abu Dhabi Aviation as well as a USD 300 mn BlackRock-managed fund-led funding round. The eVOLTs will be deployed to the Corniche, Saadiyat Island, and parts of western Abu Dhabi like Al Bateen, Al Khalidiya, and Al Maqtaa.

PSAs-

#1- Dubai will implement flexible working hours for government employees from 1 July to 12 September, as part of a Dubai Government Human Resources Department (DGHR) initiative, according to a Dubai Media Office statement. Participation will be left at the discretion of each government entity.

The new hours: Employees will be divided into two groups: one will work eight-hour days from Monday to Thursday with Fridays off, while the other will work seven-hour days Monday to Thursday, and 4.5 hours on Fridays.

IN CONTEXT- The move follows a pilot last year across 21 entities, which DGHR says improved productivity and work environments, and lifted employee satisfaction to 98%.

#2- Dubai tram back in service after Marina fire: Tram operations between Dubai Marina station and Palm Jumeirah station have resumed, Dubai’s Roads and Transport Authority said in a post on X. Service was temporarily suspended on Friday night as a safety precaution following a nearby high-rise fire.

HAPPENING THIS WEEK-

#1- President Sheikh Mohamed bin Zayed Al Nahyan is at the G7 summit in Canada till tomorrow. The summit this year is set to be dominated by the Iran-Israel conflict, while trade talks are likely to heavily feature as US President Donald Trump plans bilateral meetings. Also on the agenda: the Russia-Ukraine war, critical minerals, and AI.

#2- The US Federal Reserve’s Open Market Committee is meeting on Tuesday and Wednesday to assess interest rates and economic outlook amid global and domestic uncertainty.

The US Federal Reserve is widely expected to maintain its current policy, keeping benchmark federal fund rates at 4.25%-4.50% during this week’s meeting as persistent tariff-related inflation and global uncertainties overshadow easing pressures, according to a Reuters poll of economists. Economists estimate the first cut won’t arrive until September, with another potential cut set to follow by the year-end.

#3- The Global South Economic Forum will take place tomorrow at the Anwar Gargash Diplomatic Academy in Abu Dhabi, and will gather policymakers, experts, and technocrats. The forum will tackle the USD 4 tn gap faced by developing nations in development financing, and explore frameworks to strengthen economic ties and integration through trade blocs, according to a press release.

#4- The Middle East Event Show is happening on Tuesday and Wednesday at the Dubai World Trade Center. Industry players from the events sector will meet for seminars, discussions, and networking sessions on the latest sector-specific trends.

#5- The Abu Dhabi Infrastructure Summit will be running on Tuesday and Wednesday at the Abu Dhabi Energy Center. The event will see upwards of 70 speakers, 2k attendees, and 25 exhibitors meet to discuss urban planning, smart cities, mobility, energy, and healthcare.

THE BIG STORY ABROAD-

Once again, the international press is zeroing in our part of the world as Israel’s war with Iran enters its fourth day, with reports coming out overnight about the US vetoing Israeli plans to kill Iran’s supreme leader and continuing strikes that have now pushed the death toll to at least 244 in Iran and 10 in Israel.

US President Donald Trump allegedly vetoed Israel’s plan to kill Iranian Supreme Leader Ayatollah Ali Khamenei, which it presented to the US in recent days amid the ongoing escalations between Iran and Israel. The Trump administration reportedly rejected the plan as it saw it as “as a move that would enflame the conflict and potentially destabilize the region,” an unnamed US official said. Israeli Prime Minister Benjamin Netanyahu in response to the news seemed to refuse to put regime change off the table, telling Fox News that “we do what we need to do.” (Associated Press | Reuters | Financial Times | Guardian | New York Times)

While over in the business papers, Renault CEO Luca de Meo has stepped down to pursue a new position as CEO of French luxury group and Gucci owner Kering. Kering shareholders will be hoping that de Meo will be able to turn around the company like he did with the previously struggling French automaker, with shares in the luxury brand having lost 60% of their value in the last two years. (Financial TimesT | Reuters | Bloomberg)

***

You’re reading EnterpriseAM UAE, your essential daily roundup of business, economics, and must-read news about the UAE, delivered straight to your inbox. We’re out Monday through Friday by 7am UAE time.

EnterpriseAM UAE is available without charge thanks to the generous support of our friends at Mashreq. Tap or click here to get your own copy of EnterpriseAM UAE.

Want to send us a story idea, request coverage, ask for a correction, or otherwise get in touch? Reach out to us on UAE@enterpriseAM.com .

DID YOU KNOW that we also cover Egypt, Saudi Arabia, and the MENA climate and logistics industries?

***

Tags: