Good morning, lovely people. What a week it’s been… we hope you’ve all stayed safe and as well as can be, all things considering.

Last night brought a bit of panic back for those of us in Dubai who had started going back to our normal lives, after receiving alerts in the evening to stay indoors due to missile threats — the first such alert in a few days. Reports of some loud interceptions being heard were shared across social media, while Abu Dhabi saw an incident of falling debris from an interception earlier in the day resulting in six injuries. Victims were identified as Pakistani and Nepali nationals.

Where things stand this morning

  • Azerbaijan’s Defense Ministry accused Iran of a drone attack that flew across its border and injured four civilians, and vowed to respond to Iran’s act of aggression, Reuters reports;
  • Iran’s armed forces denied responsibility for the attack and blamed Israel for the action, according to Iranian state media ;
  • Bahrain’s main oil refinery was targeted yesterday, resulting in a fire that was later contained;
  • The latest update from the Defense Ministry said it intercepted six ballistic missiles yesterday, with the final one falling into Emirati territory. It also detected 131 drones, six of which weren’t intercepted.

Plus: The UAE is now reportedly looking into potentially freezing Iranian assets held within its borders, a move that would mark a major retaliation and would significantly limit Tehran’s access to FX and global trade, the Wall Street Journal reports, citing people it says are in the know. Sources say officials have already warned Iran of this possible move, which they say could also trigger a major prolonged retaliation from Iran on Gulf states.

Assets that could be held would include capital flowing through currency exchanges and maritime firms, which are often said to operate oil tankers on behalf of Iran, the WSJ reports.

As the government mulls its response to Iran’s attacks, we look into how the UAE’s sovereign wealth funds might tweak their investment strategies during this time in this morning’s Big Story Today. Scaling back investments and repurposing them towards the government? Not out of the question, GlobalSWF says.

But for now, it’s business as usual — Abu Dhabi Investment Authority is backing Japanese digital payments platform PayPay’s IPO, and was among several investors divesting their stake from Medline to reap windfalls after its rally this year. 2PointZero Group is also on an acquisition spree in spite of everything, making its second high-profile acquisition this week.

(Not) getting out of Dodge?

While some flights managed to depart the country yesterday, others were forced to turn back, including a French repatriation flight, while others still were canceled for the time being, due to the missile threat. More than 1k flights were canceled, according to Flightradar24.

The UAE’s flag carriers have been operating limited flights for the past few days, opening up airspace gradually, with the goal of having 48 flights depart the country per hour through emergency corridors, Economy Minister Abdulla bin Touq Al Marri said earlier this week.

From the Dept. of Good News

Most analysts thin k supply disruptions will be short-lived and likely offset by global market oversupply. FitchRatings said that a Hormuz closure is likely to be “temporary” and cause a “limited” shock to oil prices.

Where things stand: Global inventories sat at 8.2 bn barrels at the end of 2025, enough to cover a pause in oil shipments via the Strait of Hormuz for over 400 days, Fitch data indicates.

Fitch remains steady on its 2026 forecast. The ratings agency does not expect its USD 63 per barrel Brent oil forecast for 2026 to see a significant increase. The agency is expecting supply to rise by 2.4 mn bbl / d and demand by 800k bbl / d.

Still, oil prices soared nearly 5% last night, with Brent crude reaching USD 85.4.

Vessels looking to transit the Strait of Hormuz could also secure ins. coverage, after ins. firm Gallagher’s Marine Divisional Director Angus Blayney said that the London ins. market is prepared to provide coverage, Bloomberg reports. Blayney flagged that the current near standstill in the strait comes down to shipowners choosing not to pass given recent attacks on ships, rather than holding off due to a lack of ins.

AND- The Central Bank of the UAE wants you to know the financial sector remains stable. Governor Khaled Mohamed Balama said in a statement (pdf) that the sector “continues to demonstrate the highest levels of resilience and stability.” Banks, financial institutions, and payment systems have remained unaffected by the ongoing developments and are operating normally, Balama said.

Liquidity and capital adequacy ratios are in good shape, with the liquidity coverage ratio sitting at 146.6% and the capital adequacy ratio at 17% — both comfortably above the minimums required by global supervisory bodies. Meanwhile, total assets in the banking sector have now crossed the AED 5.42 tn mark, according to the statement.

From the Dept. of Not-so-Good News

Markets closed in the red again yesterday, on their second day of trading following a two-day suspension. The DFM fell 1.3% while the ADX fell 2%, dragged down once again by financial and property heavyweights.

Despite that, Wall Street is warming up to Adnoc’s listed empire: US investment bank Cantor Fitzgerald initiated coverage of Adnoc’s six spun-off and publicly traded companies, assigning overweight ratings across the board and price targets implying roughly 30% upside on average, The National reports, citing a company statement.

The bank sees the UAE energy sector generating about USD 11 bn in cashflow by the end of the decade, supporting dividend yields of around 5-6%, despite the near-term volatility.

ICYMI- Cantor is leaning bullish on UAE equities despite the current volatility. In a note to clients, analyst Kato Mukuru urged investors to buy the dip in the banking sector, assigning overweight ratings to seven Emirati lenders and describing them as “low-risk, high-return” plays.

Market watch

Will the UAE and Kuwait be the next to wind down oil exports? After Qatar’s state energy giant QatarEnergy halted LNG production and Iraq’s government said it was cutting production by almost 1.5 mn bbl / d, analysts are forecasting that the UAE and Kuwait could be the next Gulf players to reduce output if the Strait of Hormuz blockage persists, Reuters reports.

A lack of storage space would be behind a shutdown, with JPMorgan analysts predicting the Emirates have 22 days left before all storage options are used up if exports don’t start moving again through the strait. Kuwait has even less, with 18 days.

Another industry that could suffer from the disruptions? Semiconductor manufacturing, as critical materials coming from the Middle East could become stranded, Reuters quotes South ‌Korean lawmaker Kim Young-bae as saying.

South Korea produces about two-thirds of the world’s memory chips and relies on the Middle East for some of its key materials, including helium from Qatar. Any disruption could raise energy costs and chip prices globally. The crisis also threatens Big Tech’s expansion of AI data centers in the region, after data centers were hit in the UAE and Bahrain.

Supply chain disruptions benefit no one. State AI firm G42 expects shipments of advanced US chips, “mostly Nvidia,” along with Cerebras and AMD, in the coming months. These chips are essential for the country’s data center projects, including the planned 5 GWStargate UAE AI campus, part of Washington’s USD 500 bn Stargate program.

Watch this space

TRANSPORT — Beijing-based autonomous vehicle manufacturer Neolix has halted all autonomous delivery operations in Abu Dhabi, Reuters reports. The firm said it is keeping in touch with local authorities to monitor the situation and plans to resume operations once US/Israel-Iran regional tensions de-escalate.

ICYMI- The move follows a similar retreat by WeRide, which grounded its robotaxi fleet in Dubai earlier this week. The operator is still running in Abu Dhabi and Riyadh, with staff working from home for safety precautions.

WEATHER- Expect a high today of 27°C in Dubai and Abu Dhabi along with overnight lows in the 20°C range

The big story abroad

US President Donald Trump just fired Homeland Security Secretary Kristi Noem after months of controversy following fatal shootings of US citizens by federal officers and a controversial USD 220 mn advertising contract. Oklahoma Senator Markwayne Mullin is set to replace her by the end of the month. This marks the first cabinet minister under Trump’s second term to be fired.

The US is also reportedly considering implementing requirements to export Nvidia and AMD chips only to countries who have made investment pledges in the US. This would follow a tiered format, the Financial Times reports, depending on the compute power exchanging hands.

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