The United Arab Emirates, the tourism and commercial hub of the Gulf region, said on Monday that it had foiled a second missile attack by Yemen's Iranian-aligned Houthi movement group, which last week hit a fuel depot in Abu Dhabi, killing three people.
The Houthis, who are battling a Saudi-led coalition that includes the UAE, have said they want to punish the UAE for backing militias that are blocking their attempts to capture oil-producing regions in Yemen.
The Houthis have carried out cross-border missile and drone attacks on Saudi Arabia, but with their first attack on the UAE on January 17 raised the stakes of a conflict largely seen as a proxy war between Saudi Arabia and Iran. The defence ministry of the UAE, part of the six-nation Gulf Cooperation Council GCC, said it had destroyed two ballistic missiles on Monday with no casualties.
The group has fired Zulfiqar ballistic missiles at the Al - Dhafra airbase in Abu Dhabi, which is used by the United States, and other sensitive targets, according to the Houthi military spokesperson, Yahya Sarea.
He said foreign companies and investors should leave the UAE as it has become unsafe, and that the group is ready to meet escalation Air strikes on Yemen, which the coalition says are intended to cripple Houthi capabilities, kill at least 60 people in Saada province on Friday and about 20 people in the Houthi-held capital Sanaa on Tuesday.
The U.S. embassy issued a rare security advisory for the UAE, urging its citizens to maintain a high level of security awareness.
Karen Young, director at the Middle East Institutes' Economics and Energy Programme, said that this is an escalation and changes the regional dynamic.
The safety of the GCC now has risk calculations that approach what we know in other parts of the Middle East, she said, citing potential risks to energy pipelines and production facilities as well as civil aviation.
Dubai's benchmark stock index closed down nearly 2%, while the Abu Dhabi stock index ended the day flat. The higher oil prices were providing support to markets, analysts said.
Some of the residents of Abu Dhabi have been rattled by the attacks.
"I feel safe, but I don't know how it will escalate," said 19-year-old American medical student Tahlia Rivera.
Spanish tourist Arabela Fernandez Rabena, 30, said she would not cut short her holiday, trusting UAE defence capabilities.
A video of an F-16 warplane destroying a Houthi missile launcher in Yemen was released by the UAE, which has an advanced anti-missile interception system.
The Houthis attacked Saudi Arabia on Monday, which reported material damage from remnants of an intercepted missile in a southern industrial area.
On Sunday night, a missile fell in another southern region, injuring two foreigners. The coalition intervened in March 2015 after the Houthis removed the government from Sanaa. The group says it is fighting a corrupt system and foreign aggression.