Yemen conflict risk hits 4-year high as Houthis strike 8 tankers

UN envoy Hans Grundberg warned Aug. 7 that Yemen's conflict risk has reached its highest level since the 2022 ceasefire, as Houthi attacks on Red Sea shipping threaten a second maritime choke point.

"The Houthis may be seeking leverage over Saudi Arabia to gain political and economic concessions," said Kristian Coates Ulrichsen, a fellow for the Middle East at Rice University's Baker Institute. "But the Saudis too have shown greater assertiveness in their conduct of airstrikes, which could add to regional escalatory dynamics."

Since July 20, Houthi militants have struck at least eight Saudi oil tankers in the Red Sea and Gulf of Aden, according to the group's military spokesman Yahya Saree. Saudi Arabia has responded with airstrikes against Houthi targets in Yemen for the first time since the 2022 truce, while also carrying out joint strikes with the U.S. in Iraq on July 28.

The escalation threatens to render the Bab al-Mandab Strait inoperable, forcing tankers to divert through the Suez Canal and adding about four weeks to journey times for Asian destinations. With the Strait of Hormuz already largely shut since Feb. 28, a second closure would squeeze global oil supply chains already stretched by the loss of production in the spring.

Red Sea workarounds under threat

The renewed Houthi campaign has put at risk Saudi Arabia's strategy of redirecting oil exports away from the Strait of Hormuz through its western ports. Within days of the Hormuz closure in March, the East-West pipeline from the Saudi processing facility at Abqaiq to Yanbu on the Red Sea was operating at full capacity of 7 million barrels per day. This allowed the Saudis to export around 3.43 million barrels per day in May — less than half the prewar level but far higher than neighbors like Kuwait, which lacks any alternative to Hormuz passage.

Both Yanbu and the UAE's bypass pipeline from Abu Dhabi to Fujairah were targeted by missiles and drones during the first phase of the Iran war. Vital Saudi oil infrastructure has also come under attack from both the Houthis and Iranian-aligned groups in Iraq, who may have damaged the crucial processing facility at Abqaiq.

The Houthi escalation began in earnest in early July when a delegation flew from Sanaa to Tehran on Mahan Air to attend the funeral of Iran's former Supreme Leader, Ayatollah Ali Khamenei. When the delegation attempted to return on July 12, the Saudi-backed internationally recognized government in Yemen struck the runway in Sanaa, forcing the flight to divert to Hodeidah. The return flight reportedly carried IRGC personnel along with components for missiles and drones.

Expanding risk zone

The drone attacks on vessels in Egypt's Mediterranean port of Damietta on July 29 have expanded the zone of risk to a third choke point. Although the world's largest oil tankers cannot transit the Suez Canal, they can use the SUMED pipeline to shuttle oil from the Egyptian Red Sea port of Ain Sokhna to Sidi Kerir on the Mediterranean. If shippers and insurers perceive that Egypt's Mediterranean facilities are within Iranian range, the Red Sea could be restricted at both ends.

The last time Houthi attacks disrupted Red Sea shipping from 2023 to 2025, the group avoided hitting Saudi vessels, enabling the kingdom's west coast pivot. That restraint has now been abandoned. The Houthis have also claimed attacks on vessels off Yanbu, a major Saudi port city on the Red Sea.

Iran, meanwhile, has warned Gulf states that any renewed U.S. attack on its territory would trigger retaliation against energy infrastructure and other regional targets. The warning was conveyed through high-level diplomatic contacts after President Donald Trump threatened on July 28 to strike Iran's energy network. Trump said Aug. 2 he had agreed to cancel a planned attack "subject to being able to rapidly make a deal."

The overlapping conflicts — the Iran war, the Houthi campaign, and the Israel-Hezbollah ceasefire tensions — have defied resolution and risk inflicting even greater harm on the world economy in the weeks ahead. For oil markets, the key question is whether the Bab al-Mandab becomes as restricted as the Strait of Hormuz, which would effectively sever the shortest route between Gulf producers and Asian buyers. Safe-haven assets such as gold have drawn bids as investors price in the risk of further supply disruption.

This article is for informational purposes only and does not constitute investment advice.