UAE seeks US financial safety net amid Iran war, WSJ report

Saudi Finance Minister Mohammed Al-Jadaan said restoring normal oil logistics after the conflict could take until the end of June, warning against expectations of a quick recovery.

Gulf states have raised billions in debt to bolster liquidity; Abu Dhabi raised about $4 billion through private placements, while Bahrain established a $5 billion swap line with the UAE to support financial stability.

Finance ministers and central bankers meeting at IMF and World Bank sessions cautioned that a quick regional recovery is unlikely.

US Treasury officials invited Gulf countries on the sidelines of IMF–World Bank meetings in Washington to discuss infrastructure and recovery needs, signaling support if assistance is required.

S&P Global said the UAE’s strong fiscal and external buffers would help absorb shocks from the regional conflict, but prolonged disruption to oil exports and infrastructure damage remain key risks.

The Emirati dirham remains pegged to the US dollar and backed by about $270 billion in foreign-currency reserves, though analysts warn of increased risks to capital flows and market volatility from the conflict.

The Wall Street Journal reported, citing US officials, that the United Arab Emirates asked the United States for a financial safety net in case the Iran war deepens a regional crisis, highlighting concerns about economic damage, depletion of foreign reserves, and deterrence of investors.

As the war against Israel escalates, Iran has targeted the UAE and other Gulf nations with over 2,800 drones and missiles, though most were intercepted, according to the UAE Ministry of Defence.

The Fed has standing arrangements with central banks in the UK, Canada, Japan, Switzerland, and the European Union; during crises it has extended swap lines to nine other central banks, including Mexico, South Korea and Brazil.

Officials noted that swap lines are typically administered by the US Federal Reserve, but its Federal Open Market Committee is unlikely to approve one for the UAE.

Emirati officials told US officials that if the UAE runs short of dollars, it may be forced to use Chinese yuan or other countries’ currencies for oil sales and other transactions.

UAE central bank governor Khaled Balama reportedly raised the possibility of a currency-swap line with US Treasury Secretary Scott Bessent and Treasury and Federal Reserve officials during meetings in Washington the previous week.