Iran's Foreign Ministry has flatly rejected the United Arab Emirates' accusation that Tehran fired missiles at the country, with spokesman Esmaeil Baghaei describing the claims as unfounded and warning that they risk further destabilising the region.

Speaking on Wednesday, Baghaei said any such action would run counter to the principle of good neighbourly relations and would undermine ongoing efforts to build trust among regional states and prevent a further escalation of insecurity. He urged all parties to refrain from levelling unfounded accusations against Iran.

The spokesman framed his denial within a broader narrative of regional instability, pointing to what he characterised as the complex regional situation created by the continued malicious conduct of the United States and Israel toward regional peace and security. He specifically cited a pattern of alleged false flag operations in recent years, suggesting that Tehran views the UAE's accusation as part of that pattern rather than as an isolated incident.

The exchange of accusations follows the UAE's announcement earlier this week that it had suspended all trade, commercial and financial transactions with Iran — a step relayed by a UAE Ministry of Foreign Affairs official and tied by Abu Dhabi to regional escalations threatening peace and security. The UAE separately said it had detected two ballistic missiles launched from Iranian territory against the country, an allegation Tehran has now formally and firmly rejected.

The dispute adds a further complication to an already fraught picture across the Gulf, where the Strait of Hormuz remains largely closed to commercial shipping and diplomatic efforts between Iran and the United States have stalled. With both Abu Dhabi and Tehran now trading direct accusations, the risk of miscommunication or further escalation between two major regional players has increased, even though neither side has presented independently verified evidence of what transpired. The episode also matters because it touches two sensitive areas at once: Gulf trade and shipping links, and the already strained regional diplomatic channels that have been under pressure from wider US-Iran tensions.

Market commentary published alongside the news argued that Iran's formal denial deepens the standoff with the UAE rather than resolving it, keeping a layer of uncertainty over Gulf risk premia already elevated by the Hormuz closure and wider US-Iran tensions. The exchange of accusations was read as a sign that direct confrontation between Iran and a major Gulf oil and shipping hub remains a live risk even without independent confirmation of what happened, while Baghaei's reference to alleged false flag activity signals that Tehran expects further accusations and is pre-positioning its response — a dynamic that could sustain a steady drip of headline risk in the days ahead. On this reading, the denial alone is unlikely to move oil much beyond the existing Strait of Hormuz risk premium, but it keeps the UAE-Iran channel firmly on the list of flashpoints traders are monitoring alongside the main US-Iran track.

Earlier developments reported by the same outlet include oil prices hitting a three-week high as Iran vowed an offensive stance while denying the UAE missile claim; a private survey of inventories showing a headline crude oil draw and a large diesel draw; and the UAE's announcement, relayed by a Ministry of Foreign Affairs official, that it was halting all trade and financial dealings with Iran.

Analysts and regional observers will be watching closely for any additional statements from either government, as well as for signs of whether the episode remains contained to a war of words or spills into further action, with the UAE-Iran channel now ranked alongside the main US-Iran track among the flashpoints being monitored.