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(Bloomberg) - Yemen’s Iranian-backed Houthi group targeted the United Arab Emirates on Monday for the second time in a week, raising concerns of an escalation in the oil-exporting region even as the Gulf nation said it had intercepted the strike.

Oil gained, remaining near the highest levels since 2014 as geopolitical tensions and the prospect of improving demand pushed crude to five straight weekly gains. Brent crude traded near $90 a barrel on Monday after reports of the attack.

Shrapnel fell over scattered areas of Abu Dhabi after military defenses repelled two ballistic missiles, but there was no damage or loss of life, the UAE Defense Ministry said in a statement. The UAE said it had destroyed the launchers in Yemen’s northern Al Jawf region, more than 1,270 kilometers (790 miles) from Abu Dhabi, immediately after the missiles were fired and was “taking all necessary procedures to protect the country.”

Abu Dhabi Targeted

The strike comes barely a week after Abu Dhabi suffered its first deadly attack in Yemen’s seven-year conflict, with the Houthis warning international investors to leave and vowing to expand their range of targets in a country that’s built its economy and attracted millions of expatriates on the back of its reputation as a safe harbor in a volatile region.

The U.S. embassy in Abu Dhabi issued a rare alert urging its “citizens in the United Arab Emirates to maintain a high level of security awareness” and offering detailed advice on how to cope with missile strikes.

The escalation comes at a critical time for regional diplomacy; Iran’s longtime support of the Houthis means the incidents could upset fragile diplomatic efforts to ease frictions with Gulf Arab neighbors as well as broader negotiations to restore Tehran’s 2015 nuclear deal with world powers. 

Houthi spokesman Yahya Saree said in a televised speech on its Al-Masirah TV Monday that the group targeted the Al Dhafra military air base in Abu Dhabi and attacked several targets in the UAE’s commercial capital of Dubai using drones. There was no confirmation of any attack on Dubai.

Last week’s missile and drone attack on Abu Dhabi killed three people and wounded six, igniting a fire at the airport and setting fuel trucks ablaze.

Drones have made it possible to conduct small, targeted assaults that slip through multibillion-dollar defense systems designed to deter more advanced weapons. The physical damage -- both on land and at sea -- is usually minimal but the reputational impact could still be huge for the UAE, OPEC’s third biggest oil producer.

More than 80% of the UAE’s population is comprised of foreigners, with the emirate of Dubai establishing itself as a key global trade hub and home to one of the world’s busiest international airports.

Over the weekend, the UAE grounded all private drones and light sports aircraft for a month following what it termed as “misuse” of permits and “trespassing” into prohibited areas.

“Sensitivity to attacks is high in the UAE given their absence historically and the high contribution of tourism to the economy,” said Hasnain Malik, the Dubai-based head of research at Tellimer, putting the tourism industry’s direct contribution to the UAE economy at about 5%. This “usually implies a figure at least double this in terms of indirect contribution, and likely multiples of this in the less oil-rich emirates such as Dubai.”

Concerned about growing Iranian influence on the Arabian peninsula, Saudi Arabia and the UAE intervened in Yemen’s war in 2015 after the Houthis captured swathes of the country and pushed the internationally-recognized government out of the capital Sanaa. The war has ground on with little end in sight, disrupting supplies and contributing to one of the world’s worst humanitarian crises in what was already the poorest country on the Arabian peninsula.

While the Houthis regularly fire missiles and drones at neighboring Saudi Arabia, attacks on the UAE are rarer. The country had stepped back from the Yemen war in recent years to avoid drawing attacks on its own soil but has re-engaged over the past few weeks, helping expel the Houthis from a key energy-producing province and unleashing a new escalation.

On Friday, 82 people were killed and 266 wounded when the Saudi-led coalition, which includes the UAE, bombed a Houthi-operated prison in the group’s northern stronghold of Saada, according to Medecins Sans Frontieres.