UAE severs trade with Iran after reported missile strike

The United Arab Emirates said it had paused all trade and financial transactions with Iran, after reporting that two ballistic missiles were launched from the country toward its territorial waters.

Both fell into the water and caused no damage or casualties, the UAE said Wednesday. However, the reported strike represents an unwelcome return of the conflict to the Gulf economy's shores after more than three months. Weeks of Iranian drone and missile attacks on the UAE earlier this year, the vast majority of which were intercepted, sparked tensions among locals and hammered the country's tourism and aviation industry.

The UAE said it had taken the step to indefinitely suspend trade "in light of regional escalations that undermine regional and international peace and security."

Iranian Foreign Ministry spokesman Esmail Baghaei rejected the claim that Tehran had launched a missile at the UAE.

The incident comes with progress toward any U.S.-Iranian ceasefire or agreement on the Strait of Hormuz at a standstill.

President Donald Trump on Tuesday confirmed the U.S. is not currently in any talks with Iran and has no plans to restart them, a claim Tehran had already made. Trump also ruled out extending the 60-day ceasefire agreement, which expired Monday, after the deal effectively fell apart.

That has left the belligerents to consider their next stages in the prolonged conflict.

A key point of contention remains control of the Strait of Hormuz. Trump has repeatedly stated that the vital shipping waterway is open and in operation under U.S. control.

However, observed ship traffic through the passage remains extremely low. An attack on a cargo vessel transiting the strait earlier this week killed one person.

Iran has considered attacking U.S. military targets in Europe if the war escalates, the Financial Times reported Wednesday, citing two regime insiders. U.S. assets in Bulgaria and Cyprus were weighed as potential targets, according to the FT's report.

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This week, Trump has extended his verbal attacks to long-standing U.S. allies. On Monday, the president threatened to "bomb the s--- out of" Oman if the Gulf nation "gets in the way" of its objectives in the Middle East.

He also ordered Defense Secretary Pete Hegseth to "substantially reduce" joint drills with South Korea, accusing Seoul of failing to help with its military operation in Iran and citing his friendly relations with North Korean leader Kim Jong Un.

— CNBC's Spencer Kimball contributed to this story.