The United Arab Emirates said Monday that it intercepted an Iranian drone over its waters, an incident that follows the first exchange of fire between the United States and Iran in a month over the weekend. The episode underscored the precarious position of Gulf states, which host U.S. military facilities while lying within range of Iranian missiles and drones, leaving them exposed whenever the conflict between Washington and Tehran flares.

Iranian officials said two people were killed and several others wounded in the U.S. attack Sunday night on Larak Island in the Strait of Hormuz. Iran responded by launching missiles at U.S. sites in Jordan, which were intercepted.

During the lull in fighting, the U.S. had been ratcheting up economic pressure on Iran in hopes of forcing concessions from Tehran, including reopening the Strait of Hormuz to shipping. After the U.S. and Israel attacked Iran on Feb. 28, Iran established a chokehold on the vital strait—through which a fifth of the world's traded oil passed in peacetime—slowing ship traffic to a trickle. That has roiled the global economy, raising prices worldwide for energy and other goods. For the UAE and its Gulf neighbors, whose economies depend heavily on seaborne trade and energy exports routed through or near the waterway, prolonged disruption to the strait carries direct economic costs alongside the security risk.

As the fighting resumed, the price of Brent crude oil, the international benchmark, climbed above $90, up about 25% from the start of the war—presenting a growing problem for U.S. President Donald Trump ahead of the midterm elections. A return to open conflict would also be dangerous for the region, where Iran has targeted U.S. military bases and infrastructure in Gulf countries since the war began.

In the wake of the renewed violence, Anwar Gargash, a diplomatic adviser to the UAE's president, said on social media that "the state of neither war nor peace cannot be a sustainable solution." He called for a political solution that would restore normal navigation to the Strait of Hormuz, but also a "more realistic approach" than the June memorandum of understanding between Iran and the U.S., which, he said, "failed to outline a practical and acceptable" road map. His remarks reflected a broader Gulf push for de-escalation, as the UAE and its neighbors have sought to stay out of the line of fire while pressing both Washington and Tehran toward a durable settlement.

In an earlier short statement, the UAE Defense Ministry said it had "dealt with" an Iranian drone detected over its waters approaching from Iran. There were no reports of damage.

"This dangerous escalation constitutes a blatant violation of the UAE's sovereignty, security, and stability, and a direct threat to the safety of its citizens and residents," the Foreign Ministry said. The Defense Ministry later issued a second statement denying as false a claim by the Iranian army that the Al Minhad Air Base in Dubai had been targeted.

Following the U.S. attack on Sunday, Iran's Foreign Ministry said Monday that Iran would "not hesitate to exercise the inherent right of legitimate defense and will respond decisively to any military aggression."

Before heading to the Shanghai Cooperation Organization's summit in Kyrgyzstan with Foreign Minister Abbas Araghchi, Iranian President Masoud Pezeshkian—who has favored a negotiated end to the conflict—stressed that Iran was not seeking war. "But," he said, "we will respond decisively to aggressors." The summit brings together a group billed as a counterweight to U.S. global influence, including Chinese President Xi Jinping, Russian President Vladimir Putin, and Indian Prime Minister Narendra Modi. Pezeshkian was scheduled to meet with Putin on the sidelines on Tuesday. The gathering offers Tehran a forum to seek diplomatic and economic backing from powers that have resisted U.S. sanctions pressure.

Meanwhile, U.S. Treasury Secretary Scott Bessent was set to host meetings of the Group of 20 finance ministers in North Carolina on Monday and Tuesday, as Washington pressures other countries to help the U.S. economically isolate Iran. The shifting strategy centers on threats to punish any country or entity that continues to conduct business with Tehran.

Two weeks ago, the UAE suspended all trade with Iran after saying it had come under renewed fire from Iran, with two missiles fired at shipping traffic splashing down harmlessly in the Persian Gulf. Iran denied the attack. Bessent later suggested that pressure from Washington led to the UAE's decision.

Trump stressed last week that he is "not in a hurry" to get Iran back to the negotiating table, and he continues to make the case that the Islamic Republic's leadership is on the ropes. Appointments to Iran's senior security leadership in the past month, however, have signaled Tehran's defiance after weathering decades of sanctions, as well as a lack of tolerance for dissent at home.

On Sunday, U.S. Central Command said it had struck Iranian launchers after observing forces with Iran's Revolutionary Guard Corps preparing to launch rockets with sea mines into the Strait of Hormuz. The U.S. military said last week that it had completed clearing sea mines from the waterway's international shipping routes. U.S. military officials disputed Iran's claim that the latest American strikes were an act of aggression, calling them a "limited, precise action" against what they said were minelaying forces.

Iranian state television later showed what it said were ballistic missiles being fired at American bases in Jordan, and Jordan's military said it intercepted eight that had entered its airspace. The last time the U.S. military confirmed targeting Iran was on July 29, when it announced a "heavy wave of strikes" on dozens of Revolutionary Guard targets, including coastal surveillance and defense sites.

Source: Fortune