Gulf states including Saudi Arabia and the UAE are exploring a $2,500 Ukrainian-designed interceptor drone as a cheaper way to counter Iranian attacks that are depleting stockpiles of U.S.-made missiles, a Japanese firm marketing the technology overseas told Reuters.

Since the start of the U.S.-Israeli war with Iran, Tehran has launched waves of cheap mass‑produced drones, including Shaheds similar to those Russia uses in Ukraine.

Gulf states and U.S. forces have largely relied on costly interceptor missiles to shoot them down, underscoring a broader shift in air combat in which cheaper systems deployed in volume can steadily erode stock of advanced air defence missiles.

"Everyone started doing the maths. It simply doesn't make economic sense and people are finally waking up to that," said Toru Tokushige the Chief Executive of Terra Drone. There has been a surge of inquiries from the Middle East since the war began, he added.

The price of each interceptor drone from Terra Drone is 400,000 yen ($2,526). By comparison, ground-launched Patriot interceptors missiles can cost around $4 million each, while a Shahed drone is estimated to cost as little as $20,000.

In the first week of the Middle East conflict, Iran launched more than 1,000 drones and it is estimated to have the capacity to produce around 10,000 per month.

The Saudi Arabian and UAE embassies in Tokyo did not immediately respond to requests for comment.

Terra Drone, known for commercial drones, announced its entry into military sales last month through a tie-up with a Ukraine start up, Amazing Drones. It has designed the Terra A1, an interceptor drone, to counter Shahed attacks launched at Ukraine by Moscow.

Under their agreement, the Japanese company will market the interceptor overseas while providing investment and manufacturing know-how.

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The Terra A1 has yet to be battle tested and is expected to be handed over to Ukraine's military in the coming months for trials, Tokushige said.

Terra Drone already supplies survey and inspection drones to Saudi Arabia's state-owned oil company Aramco and could use its presence in the kingdom to help establish interceptor drone production in the Middle East, he added.

"This is an area where Japan's manufacturing strengths can be fully utilised.”

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