The United Arab Emirates has agreed to unlock billions of dollars in funds linked to Iran as part of a wider de-escalation effort following months of regional tensions and attacks during the US-Israeli war with Tehran, according to four sources familiar with the matter.
The reported arrangement, which has not been previously disclosed, is said to coincide with the final stages of broader US-Iran negotiations that could involve the release of tens of billions of dollars in frozen Iranian oil revenues held in foreign banks.
The sources said the move reflects a tactical shift by Abu Dhabi after Iranian attacks earlier in the conflict, and comes amid efforts to reduce hostilities across the Gulf region. However, the UAE foreign ministry has strongly denied that any Iranian funds have been released, transferred or facilitated.
Two regional sources said the UAE had agreed to release a total of $10 billion, with more than $3 billion already delivered.
Two other sources put the figure at closer to $20 billion, saying the arrangement was intended to secure an end to Iranian attacks on UAE territory. One of those sources said a first tranche of $3 billion had already been made available.
Reuters could not independently verify whether the funds originate from UAE-held assets or long-frozen Iranian accounts within the country’s banking system or elsewhere.
The UAE foreign ministry said allegations regarding the transfer, including claims of $3 billion already released, were “entirely false and unfounded,” adding that no frozen Iranian funds had been moved or facilitated through Emirati institutions.
A UAE official, when asked about the reported arrangement, said the country’s foreign policy was focused on de-escalation and stability.
“The UAE’s foreign policy is guided by promoting de-escalation and reducing tensions across the region, while advancing lasting peace and stability,” the official said, adding that Abu Dhabi supports international efforts, including those led by the United States, to protect regional populations from the impact of conflict.
The White House did not immediately respond to requests for comment. In Washington, Vice President JD Vance said on Friday that no funds would be released to Iran simply for signing a deal or attending talks, stressing that any potential agreement would be structured so that financial benefits would only flow if Tehran met its obligations.
Iranian authorities also did not immediately respond to requests for comment on the reported arrangement. None of the sources cited in the report agreed to be identified due to the sensitivity of the matter.
The reported financial move comes after a period of heightened tension between Iran and the UAE, during which Iranian strikes disrupted regional confidence and affected Dubai’s role as a major commercial hub.
According to one source, Iranian attacks during the conflict had previously led to an exodus of expatriates and a decline in tourism and business confidence in the emirate.
The last known direct Iranian strike on the UAE reportedly took place on May 4, targeting Fujairah port on the Gulf of Oman. Since then, Iran has reportedly shifted its missile and drone activity towards Kuwait and Bahrain, while sparing the UAE from further attacks.
Sources said the emerging arrangement represents part of a broader diplomatic formula designed to reduce tensions without forcing either side to publicly concede ground.
One source said the structure allows Iran to claim compensation for war-related losses, the United States to deny direct payments, and the UAE to strengthen security guarantees while promoting regional stability.
Another source said the deal also includes provisions for Iran to halt missile and drone attacks on the UAE, alongside steps to rebuild bilateral relations, including intelligence sharing and economic cooperation.
Iran, according to the same source, has approached at least two other Gulf states with similar proposals.
The arrangement reportedly began taking shape several weeks ago but accelerated after officials from Iran’s
Revolutionary Guards visited Abu Dhabi for meetings with Sheikh Tahnoun bin Zayed al Nahyan, the UAE’s national security adviser and deputy ruler of Abu Dhabi, at his guest residence. Emirati officials later travelled to
Tehran to continue negotiations on the mechanism.
The reported initiative unfolds against a complex financial backdrop involving Dubai, where banks have long held significant Iranian-linked deposits now largely frozen under US sanctions. These restrictions are part of
Washington’s global dollar-clearing system, which penalises financial institutions that engage with blacklisted Iranian entities.
Earlier this year, Iranian sources had suggested that the United States had agreed to release frozen Iranian assets held in Qatar and other jurisdictions, though that claim was denied by a US official.
One source linked potential unfreezing of assets to ensuring safe passage through the Strait of Hormuz, a key chokepoint in global energy transport and a central focus of ongoing diplomatic discussions.
The UAE, Iran and the United States are all engaged in parallel efforts to manage tensions and explore potential frameworks for de-escalation, even as mutual distrust and regional instability continue to shape the geopolitical landscape of the Gulf.
