DUBAI, UNITED ARAB EMIRATES, AUG. 22 -- The small emirates of the lower Arabian Peninsula are watching with increasing unease as Iran and the United States match wits and power in the waters of the Persian Gulf and Gulf of Oman.

Some are newly rich from oil; some, like Dubai, also have had a long trading relationship with Iran, and all are acutely aware of their giant neighbor across the gulf.

They are less wary of the friction between Sunni and Shiite Moslems that colors views elsewhere in the region than sensitive to a large neighbor willing to throw its weight around but also valued as a steady customer.

"When you have a big guy and a little guy, you can put two little guys up against the big one and it will be a fair fight. But when you've got little guys and a giant, there's not much that you can do," said a diplomat with long experience in the region.

Dubai and the neighboring states that make up the United Arab Emirates have underscored this simple fact of international life, demonstrating considerably less enthusiasm for the military challenges taking place off their shores than beleaguered Kuwait at the northern end of the gulf.

A glance at the map and at historical trade patterns does a lot to explain why. A walk along the winding natural harbor of Dubai, called the Creek, paints an even more graphic picture.

Low-slung dhows, the ancient sailing ships of the Arabs and Persians, snuggle in the shadow of giant modern buildings, taking on cargos of everything from powdered milk to refrigerators to machine tools, almost all destined for Iran, a 24-hour sail across the Persian Gulf.

"The business of Dubai is business," said another diplomat, "and a large chunk of that business is with Iran. It is no surprise that the farther you get down the Arabian Peninsula, the closer the ties are to the Iranians."

Kuwait, in the north, looks out on its bigger neighbor, Iraq. Dubai, Sharjah, Abu Dhabi and the other emirates making up the UAE look across the water to Iran.

"There's 50 million people over there. There's only maybe 300,000 indigenous Arabs over here. How would you feel? You better behave or they'll give you a good spanking," said a shipping source with long experience in the region, describing the emirates' perspective.

Even analysts sympathetic to the American view of the current gulf crisis admit that there are clear differences between the Kuwaitis, and perhaps the Saudis, and the smaller states of the lower peninsula.

Noting that the smaller gulf states are not committed for or against either of the major protagonists here, one analyst said, "They may have preferred something different" from Kuwait's request for reflagging and the subsequent arrival of American warships, "but once the United States is here, they appreciate it."

Still, in Fujayrah, a small port emirate on the Gulf of Oman, "as soon as this is over and they can get back to business as usual, the happier they will be," the analyst said.

Fujayrah, with no known oil wealth, has depended on its port as a major supply base for the tanker trade. Mines off the port are reported to have affected this tanker traffic markedly.

In Dubai, there is said to be a "healthy concern" about potential damage from mines. "They see themselves as very vulnerable," said the analyst.

These emirates reportedly have given port-call rights to the expanded U.S. and British fleets in the area, and perhaps to the French, although there seems to be an understanding that no more than one vessel will call at a time.

Dubai and Abu Dhabi are the only two emirates with substantial oil revenues. While the UAE has a quota, imposed by the Organization of Petroleum Exporting Countries, of 948,000 barrels per day, oil analysts estimate that Abu Dhabi is pumping about 1.2 million barrels per day and Dubai about 400,000, up from 75,000 barrels or so earlier in the year.

At this rate and at current prices, Abu Dhabi would get oil revenues this year of almost $8 billion while Dubai would get about $2.5 billion.

By comparison, Iran, which has taken advantage of a lull in the tanker war with Iraq to boost its oil exports, is shipping about 2 million barrels a day, up 500,000 from a year ago.

Oil, however, is a newcomer to the Arabian Peninsula. Trade, especially with Iran, has been around for a long time.

In 1986, more than 7,000 dhows left from Dubai harbors bound for Iran, carrying goods valued at more than $325 million, according to official statistics. Much of this was reexport of items bought elsewhere and then sold to Iran. Iran was Dubai's biggest customer by far for this most important part of its commerce, with about one-fourth of all reexports.

Statistics in the Dubai newspaper Khaleej Times for the first six months of this year show exports running at an annual rate of more than $400 million.

The official statistics are believed to underestimate vastly the real value of the export trade, however. "There is a lot of shady and semi-shady stuff going on, not to mention outright smuggling," said one close observer of the dhow trade.

Included in the more than $200 million in official reexports to Iran in 1986 was about $80 million in foodstuffs and animals for food and an equal amount in manufactured goods and machinery and transport items. A walk along the Creek this week showed dhows loading up with cooking oils from Malaysia, teas from India, air conditioners from Japan and electronics goods from Taiwan.

Other prominent exports waiting to be loaded on the small dhows include refrigerators, washing machines, vacuum cleaners, juice blenders, audio cassettes and electric shavers.

While one diplomat estimated that as much as 70 percent of Iran's nonpetroleum imports may come from the emirates, other observers have noted that there is a very heavy commercial traffic overland between Iran and its neighbors to the northwest and southeast, Turkey and Pakistan.

Whatever its real volume, this trade has been going on for centuries and has played a major role in Dubai for decades.

Into the 19th century, most of the Iran trade was centered on one of the many islands that dot the waterways between the Arabian and Persian sides of the gulf. When the Iranian government asserted control over the island, however, most of the traders left and settled at the head of the Dubai Creek.

For decades after, Dubai was a dusty trading town, but one with a view to the outside world because of that trade. As a result, links with Iran run deep. Many of the traders who came here then were Iranians, but, they claim, Iranians who had gone to Iran from the Arab side of the gulf generations before.

"Dubai always was a free zone," said one Asian diplomat who knows the region well. "Sheik Said, father of the present ruler, Sheik Rashid, encouraged other traders to come here. That is how the Indian traders also came 50 years ago. Most of the money spent in Dubai has been on infrastructure, on roads, on ports. There are few grandiose, show projects like you sometimes see elsewhere."

The combination of trade and migration patterns has meant that Dubai has a noticeable Iranian and Shiite population, but so far it does not appear to have been a problem.

"Almost all the Shiites in the UAE are in Dubai and Sharjah. Some are from the Arab side but many are from Iran," said one diplomat, who put the number of Shiites in Dubai at about 50,000.

"They are mostly small merchants. There are a few pictures of Khomeini deep in the souk {marketplace}. They are not regarded as a problem, but they are watched closely."