Iranian importers have been barred from opening of letters of credit (L/Cs) for imports from the UAE, according to local media reports.

The semi-official news agency, Mehr, says the L/C ban is due to the UAE's "illogical behaviour."

Trade ban

"Based on the government's recent decision, opening L/Cs for imports from the UAE has been banned," the news agency quotes Iranian parliamentarian, Gholam-Reza Mesbahi-Moghaddam, as saying.

Other media reports suggest that the Islamic republic may ban all trade between the UAE and Iran.

Dubai traders

The L/C ban is the latest blow for the tens of thousands of Iranian traders based in the UAE, mainly in Dubai.

They have already had their business activities severely curtailed by US and European sanctions imposed on Iranian L/C business.

Worsening relations

The UAE has become increasingly critical of Iran over recent months, not least because of the Gulf state's concerns over Tehran's nuclear ambitions.

Relations between the two countries have worsened still further during the Arab Spring, notably over the sporadically violent protests in Bahrain.

Broadly, Iran supports the mainly Shiite Bahraini opposition movement, while the UAE is backing Bahrain's monarchy.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.