Houthi offensive threatens Saudi oil exports, rattles global markets

A week ago, Iran-backed Houthi rebels swept down Yemen's Red Sea coast in their largest territorial advance in years, capturing the port city of Mokha and seizing islands near the Bab el-Mandeb strait—a narrow waterway through which roughly 12 percent of the world's maritime trade flows in peacetime. The offensive has reignited a civil war that has ground on for twelve years, already pushing global fuel prices higher and forcing more than 125,000 Yemenis to abandon their homes with little more than what they could carry.

The Houthis, backed by Iran, are now positioned to threaten Saudi Arabia's oil exports directly. They have begun firing on Saudi oil facilities and tankers, and their reach extends to within 32 kilometers of Djibouti, a small African nation hosting U.S. military bases. The rebels captured Mokha before taking control of the islands guarding the Bab el-Mandeb strait, giving them what analysts describe as a new ability to harass shipping with relative ease. A Houthi political official told the Associated Press that the group's actions are a response to Saudi Arabia's long-running blockade of Houthi-controlled territory, framing their advance as retaliation for what they call an unjust embargo.

Shipping traffic through the strait initially dropped from 35 daily transits to 25 following the Houthi advance, but has since recovered to 45 transits by Sunday, suggesting that markets and shipping firms are adjusting to the new reality rather than abandoning the route entirely. Still, the threat remains volatile. During the height of the Gaza conflict, the Houthis attacked ships in the Red Sea with no clear connection to that war, and analysts warn they could expand their targeting criteria beyond Saudi-linked vessels to pressure both the kingdom and the global economy more broadly.

The immediate humanitarian toll is severe. The UN's humanitarian office reports that eight civilians have been killed and 32 wounded in recent fighting, though the Saudi-backed Yemeni government claims the Houthis have killed around 150 civilians since September 3. The displacement of 125,000 people compounds a crisis that has already devastated a nation that was the poorest Arab country even before the civil war began. Yemen has experienced widespread hunger for years due to the conflict and the Saudi-led blockade. The Houthis' detention of UN and aid workers has further hampered international assistance in territories under their control, and the UN's humanitarian office reports that only 20 percent of its appeal for Yemen has been funded. A supervisor with Doctors Without Borders working in Mokha described conditions as extremely difficult, with medical staff struggling to maintain essential services amid the threat of air strikes. One woman, Mahida Ahmed, fled Mokha with her children but no possessions, now sheltering in a displacement camp in Aden while her husband remains trapped in the city.

Diplomacy appears to be the only path toward de-escalation, but the obstacles are formidable. Saudi Arabia and its allies have long struggled to contain the Houthis militarily, and the U.S.—which bombed the group under both the Biden and Trump administrations—has shown no interest in intervening this time. Last weekend, Oman hosted a meeting between U.S. and Houthi representatives, according to a Houthi official and another person familiar with the talks. The U.S. says it remains in constant contact with Saudi Arabia, its close ally and a major recipient of American military aid. Saudi Crown Prince Mohammed bin Salman recently visited Egypt, which has positioned itself as a regional mediator, and Turkey has indicated it is in talks with Iran and the United Arab Emirates to lower tensions.

Any diplomatic breakthrough, however, would likely require the U.S. to make concessions to Iran—the only country with meaningful leverage over the Houthis. Iran wants the U.S. to lift its blockade and sanctions, while the U.S. seeks full reopening of the Strait of Hormuz and a rollback of Tehran's nuclear program. A preliminary agreement between the two countries crumbled over the summer, and neither side has shown signs of movement since. The Houthi offensive is the first test of a new defense pact among Saudi Arabia, NATO member Turkey, and nuclear-armed Pakistan, but officials from Turkey and Pakistan say they have not received a request for support from Riyadh. For now, the Houthis appear intent on keeping the U.S. out of the conflict, claiming they are attacking only Saudi shipping—a distinction that may not hold if their military position strengthens or their political demands go unmet.