The United States and the United Arab Emirates have signed a deal for a missile defense system in the Persian Gulf nation.

The Pentagon said in a statement Friday that U.S.-based defense contractor Lockheed Martin has been awarded a nearly two billion dollar contract to supply the UAE with two Terminal High Altitude Area Defense Systems .

Defense officials says the deal includes additional equipment, training and support that boosts the total value of the package to approximately $3.48 billion.

The missile system upgrade is part of the efforts of U.S. President Barack Obama's administration to build up the defenses of its allies in the Middle East to offset Iran's expanding ballistic missile arsenal.

Tensions increased this week when Tehran threatened to disrupt traffic through the Strait of Hormuz, a key Persian Gulf oil transport route, if Western powers imposed sanctions on Iran's oil exports.

The EAU project follows Thursday's announcement that the U.S. was selling another ally, Saudi Arabia, 84 fighter jets worth $30 billion.

In September 2010, the United States agreed to sell more than 200 Patriot missiles to Kuwait worth $900 million.