Good morning, everyone. Despite US President Donald Trump signaling the war will end “very soon,” and the Emirates seeing the volume of attacks slow down, the country yesterday took a hefty hit after Iran struck Adnoc’s main oil refinery, halting operations.

In other not-so-good news, Oxford Economics is the latest to shave off a few percentage points from our economic growth forecast due to its exposure to ongoing disruptions in the Strait of Hormuz and an expected hit to tourism.

We still have some bright spots to cover, with the DFM and ADX closing in the green yesterday for the first time since the war began, and DP World and AD Ports setting up land bridges to bypass the ongoing disruptions at the Strait of Hormuz.

Other players are also showing optimism, with Azizi Developments set to invest AED 75 bn in developing hotels (primarily in Dubai), Adia doubling down on follow-on investments, and ICICI Prudential Asset Management opening its new DIFC office.

PLUS- Fitch Solutions’ BMI sees the government stepping in to prop up the retail sector should consumer confidence take a hit and tourism inflows decline, as is expected.

UAE markets closed in the green yesterday for the first time since the start of the war, with the DFM rising nearly 2% and the ADX gaining 1.4%. This comes after a rocky start to trading for both indices after a two-day suspension last week to ease the impact of the war, which saw the DFM lose more than 11% from its last close before the war, and the ADX fall around 5.7%.

“We believe that the market may be reassessing the risk premium assigned to the [banking sector], leading to the recent correction,” Chiro Ghosh, head of research at Sico, tells EnterpriseAM. He cautioned that an increase in delinquencies could emerge in segments tied to real estate, tourism, and hospitality.

Real estate stocks continued to weigh on the ADX with a 3.5% decline, but utilities (+4.51%), healthcare (+3.12%), and technology (+2.97%) helped drive gains.

Dubai’s rally was driven primarily by financials (+5.60%) and consumer discretionary (+5.64%), while real estate (-2.29%) remained under pressure. Emaar is now down 22.7% for the month and 9.3% YTD.

Watch this space

TOURISM — The UAE is among the MENA countries most exposed to a hit to its tourism sector from the regional war, with Dubai especially vulnerable due to its proximity to Iran and reliance on international visitors, according to Capital Economics’ MENA Economics Update (pdf). History shows that crises can wipe out 30-40% of arrivals, sometimes more, and recovery often takes years.

IN CONTEXT- Tourism is a top contributor to the Emirates’ economy, bringing in AED 257.3 bn in 9M 2025, or about 13% of output.

Some comfort comes from intra-GCC travel, which makes up 27% of Gulf tourism and could help cushion declines. The UAE’s strong balance could also absorb short-term shocks, though the conflict still threatens the sense of safety that could impact the Gulf’s long-term tourism hub ambitions.

TECH — The Central Bank of the UAE reportedly granted banks short-term permission to run key cloud functions through overseas data centers following the recent disruption to local server infrastructure, The Banker reports, citing local sources.

REMEMBER- A series of drone strikes last week hit two Amazon Web Services (AWS) data centers in the UAE and one in Bahrain, causing structural damage. Several local banks were impacted by the outage, including Abu Dhabi Commercial Bank, Emirates Islamic, and First Abu Dhabi Bank.

The decision is a rare move, effectively signaling that CBUAE is doing emergency plumbing in a market where data residency is usually a hard rule.

Meanwhile, hyperscalers are reportedly rerouting Gulf data traffic eastward: The escalating war has reportedly prompted hyperscale cloud providers like AWS and Microsoft Azure to begin redirecting data center workloads from the UAE and Oman to India and Singapore, The Economic Times reports, citing unnamed sources. To maintain the low latency required for critical traffic, especially banking, companies are reportedly securing immediate capacity in Mumbai, Chennai, Hyderabad, and Kochi.

LOGISTICS — DP World launches a bonded land bridge to bypass port disruptions: DP World enacted a temporary contingency arrangement to allow customers to reroute import containers from Khorfakkan and Fujairah ports to Dubai’s Jebel Ali via bonded road transit, according to a statement. Under the new system, DP World will coordinate the trucking movement of both import and freezone shipments to ensure cargo continues to flow despite the current regional situation. Final customs clearance and duty payments on the goods will remain centralized at Jebel Ali.

So did Abu Dhabi Ports, which yesterday shared a notice (pdf) informing its customers of the temporary operational arrangement allowing them to reroute containers from Khorfakkan and Fujairah ports to Abu Dhabi’s Khalifa Port through customs bonded transit by truck or rail.

Why this matters: The UAE is using its internal road infrastructure to minimize trade disruptions. By moving goods under bond, DP World allows companies to offload cargo at the country’s eastern ports — just outside the Strait of Hormuz — while maintaining the administrative and customs convenience of Jebel Ali.

Alternative gateways are emerging through the haze: Oman’s Salalah port remains a key safe transshipment hub as it sits outside the strait — Maersk and Hapag-Lloyd continue to call at Salalah, despite dropping Jebel Ali.

REMEMBER- Major shipping giants MSC, Maersk, Hapag-Lloyd, Cosco, and CMA CGM have all suspended new transits in the Persian Gulf, diverting Gulf-bound vessels.

COMMODITIES — UAE cracks down on unjustified price hikes with AED 207k fines: The Economy Ministry has intensified market oversight in response to the ongoing regional conflict to maintain food price stability, the ministry said in a statement on X. These regulatory sweeps, averaging 700 per day, have identified 567 violations primarily involving unjustified price hikes. In response, authorities issued 449 warnings and imposed AED 207.3k in financial penalties on traders, suppliers, and retail outlets found in breach of consumer protection laws.

To mitigate supply chain risks, the ministry said it is using its international network of trade partners to secure essential imports and pivot to alternative markets, if needed. Consumers are urged to avoid hoarding and report excessive pricing.

Inflation watch

The UAE’s annual headline inflation climbed to 1.61% in November 2025, up from the 1.23% recorded during the same month last year, according to data (pdf) from the Federal Competitiveness and Statistics Center. The Consumer Price Index (CPI) hit 110.50 points.

Data breakdown: On a y-o-y basis, it was almost a broad-based growth with housing, water, and electricity leading the surge with 3.98%. Recreation and culture followed, jumping 3.51%, while household supplies rose 2.90%, and ins. and financial services went up 2.87%. Transportation (-1.42%) and textiles and clothing (-5.10%) were the only sectors that cooled down.

On a monthly basis: While the headline figure reflects a y-o-y increase, the monthly trend in November showed a slight deflationary cooling of 0.19% compared to October, primarily driven by a 2.57% drop in transportation costs and a 2.31% dip in clothing and footwear.

Oil watch

Following Monday’s drop, oil prices eased further yesterday after the Wall Street Journal reported that the International Energy Agency is considering releasing more than 182 mn barrels of oil to curb the surge in prices seen since the outbreak of the US-Israel-Iran war. A decision on the motion is anticipated today. The plan requires unanimous approval for immediate adoption, otherwise the process could be stalled.

Prices fell on the news, with Brent futures dropping 0.26% to USD 87.57 a barrel and West Texas Intermediate dipping 0.44% to USD 83.08.

This could be a double-edged sword for the UAE. By introducing artificial supply to the market, the IEA reduces the global sense of urgency, discouraging buyers from pursuing expensive Gulf oil during the war. At the same time, stable oil prices protect the long-term viability of the UAE’s broader economy, a big pillar of which is oil.

Data point

AED 73.2 bn — that was the value of residential sales in Abu Dhabi last year, after 22.4k homes changed hands, up 55% y-o-y, making 2025 the capital’s busiest year on record, according to Cavendish Maxwell’s latest market report (pdf). But this wasn’t just a volume story — transaction value climbed 70%, a sign that prices were rising almost as quickly as buyers were signing.

Off-plan stayed firmly in the driver’s seat, accounting for 71% of all transactions and AED 57.1 bn of total sales as developers kept demand humming with fresh launches, flexible payment plans, and incentives. The ready market was hardly quiet either, clocking 6.5k transactions worth AED 16.1 bn — evidence, as Director Andrew Laver puts it, of a “broad market base” rather than a one-track rally.

Apartments did most of the heavy lifting, making up two-thirds of all transactions, while prices rose 15.1% and rents climbed 12.5%, adding urgency for tenants deciding whether to keep renting or buy before the next renewal notice lands. Villas lagged slightly behind, with 12.2% yearly price growth and a more moderate 5.5% rental growth.

Supply is rising, but not fast enough to cool the mood: 15.9k units are due this year, though actual handovers are expected to come in lower at 6.5-9k units if recent delivery patterns hold.

PSA

Gov’t says this is no time for leisurely drone use: Due to ongoing hostilities and regional tensions, the General Civil Aviation Authority has issued a total ban on all drone operations and light sports aircraft across the UAE, effective immediately, according to a statement on X.

Scope of prohibitions: The ban covers all unmanned aerial vehicles, gliders, paragliders, and recreational and light sports aircraft. All previously issued flight permits are currently suspended. Any violation will be met with immediate judicial action.

Dubai is tightening building safety rules: A new law now requires building owners across Dubai — including in freezones such as DIFC — to secure a quality and safety certificate after completion, based on a full structural and technical inspection conducted by a licensed engineering office, according to Dubai Media Office.

In other words, compliance now stretches well beyond construction: Owners must fix defects flagged in inspections, keep up ongoing maintenance even after certification, and renew certificates every 10 years for buildings under 40 years old — or every five years once they cross that threshold. Dubai Municipality will also maintain a digital building database and can suspend permits, freeze transactions, or halt lease certifications until violations are corrected.

The penalty ladder climbs fast: Fines start at AED 100k and can reach AED 1 mn, with repeat violations within two years triggering penalties of up to AED 2 mn.

Despite regional airlines tentatively resuming operations, British Airways isn’t so sure. The carrier canceled all flights to Abu Dhabi until later this year, while journeys to Dubai, Amman, Bahrain, Tel Aviv, and Doha are paused until later this month, according to a post on X.

WEATHER- And yet more rain: Dubai could see another passing shower in the morning before sunshine reigns for the rest of the day, with the mercury reaching a high of 29°C and a low of 22°C. Over in Abu Dhabi, it’s a somewhat cloudy day with a high of 28°C and a low of 22°C.

The big story abroad

It’s another morning with the front pages all about the US and Israel’s continued campaign against Iran, which saw the most intense night of aerial bombardment on Tuesday. Earlier today, Iran retaliated by launching attacks on central Israel and US military sites in Bahrain.

That said, Washington urged Israel not to launch further strikes on Iranian energy facilities, especially oil infrastructure, three unnamed sources told Axios. The Trump administration reportedly argued that such attacks would harm the Iranian public and jeopardize future US cooperation with Iran’s oil sector post-conflict. Washington also cautioned that these strikes could provoke retaliatory strikes against Gulf allies and their own energy sites.

Meanwhile on Wall Street: Microsoft has cemented its support for Anthropic’s lawsuit against the Pentagon, arguing that moves to punish the AI startup would be detrimental to the broader US tech scene.

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