Yemeni government forces, supported by Saudi Arabia, launched attacks against the Iran-backed Houthis along the Red Sea in a bid to regain control of key positions. The strikes followed the Houthi capture of the port city of Mokha and Perim Island, strategic locations at the mouth of the Bab el-Mandeb Strait, a vital maritime chokepoint.
Latest Escalation in Yemen
The conflict has seen a significant increase in fighting, with Saudi Arabia reporting projectile strikes in Jazan province, wounding two people and damaging property. Earlier in the week, the kingdom stated that a wave of Houthi missile and drone attacks injured 73 people across four southern cities. The Houthis claimed to have launched ballistic missiles and drones at the Sharurah military base in Saudi Arabia's Najran region, though Saudi authorities have not confirmed damage at the base.
Conversely, government forces reported destroying Houthi vehicles and weapons in strikes near Mokha, Dhubab, and other areas in Taiz province. The allied National Resistance reported over 500 of its fighters killed on the west coast in the past month, with over 1,000 Houthi casualties in Hodeida and Taiz provinces during the same period.
This escalation reignites the years-long civil war in Yemen, which has caused a severe humanitarian crisis and displaced over 82,000 people since the start of September, according to the U.N.'s migration agency. More than 2,000 Yemenis have fled to Djibouti, across the Bab el-Mandeb Strait.
Impact on Oil and Gas Markets
The escalating attacks have begun to affect global energy markets. Oil prices saw an increase, with Brent crude futures opening significantly higher and WTI futures also climbing. U.S. diesel prices surpassed $6 a gallon for the first time on record, and oil prices gained more than 8% in the preceding week, with Brent surging over $100 a barrel for the first time since July.
Saudi Arabia previously closed its East-West oil pipeline as a precautionary measure after drone attacks damaged infrastructure. This pipeline is crucial for rerouting oil away from the Strait of Hormuz. The increased Houthi activity around the Bab el-Mandeb Strait has added a risk premium to transit, potentially leading tanker owners to delay voyages or increase freight rates, which could raise consumer costs.
While some shipments might be rerouted through the Suez Canal or Egypt’s SUMED pipeline, these routes have a smaller capacity and could result in longer, more expensive journeys. Experts suggest the duration of these disruptions will determine whether the current price increase becomes a sustained supply shock. An extended shutdown could force Saudi Arabia, the world's largest crude exporter, to reduce production.
Global oil inventories have fallen significantly, exacerbated by restrictions through the Strait of Hormuz. Analysts predict Brent crude prices will remain elevated due to the combined pressure at both Hormuz and Bab el-Mandeb.
Diplomatic Efforts and Potential Responses
Diplomatic efforts to end the conflict appear to have stalled, with a planned meeting between Gulf countries and Iran postponed. The U.S. has provided military advisors to Saudi Arabia to offer intelligence support, but has so far resisted direct military participation in the conflict.
Saudi Arabia could independently intensify its air campaign and ground support, but this risks further retaliation from the Houthis. The kingdom might also seek assistance from Pakistan and Turkey under a recent defense agreement, or pursue diplomatic avenues to negotiate a cease-fire. Some analysts suggest the Houthi actions may be aimed at securing concessions from Riyadh rather than initiating all-out war.
United States President Donald Trump has expressed optimism that the Iran War will end this year, predicting a subsequent drop in gas prices. He has also floated the possibility of maintaining a U.S. presence to control Iranian oil.