Escalating conflict in Yemen involving Iran-aligned Houthi rebels and Saudi Arabia has created mounting pressures on global oil markets and international trade flows. The Houthis have consolidated control over much of Yemen’s Red Sea coastline, including the strategically important Bab al-Mandab Strait through which approximately 6 percent of the world’s seaborne oil passes annually.
Recent military operations have intensified dramatically, with the Houthis launching drones and missiles against Saudi Arabia while Riyadh has responded with air strikes. A significant development came when the Houthis captured the Red Sea port city of Mokha and adjacent islands in a recent offensive against Yemen’s internationally recognized government. The Saudi kingdom, which has backed Yemen’s government since 2015, suffered damage to its East-West pipeline following a drone attack attributed to pro-Iranian forces, forcing temporary shutdown of this critical export route.
Energy markets have already reflected these tensions, with crude oil prices climbing to $110 per barrel in mid-September, marking the highest level in recent months. Analysts caution that a prolonged disruption to Saudi Arabia’s pipeline or Houthi actions to obstruct the Bab al-Mandab Strait could have severe global consequences. Investment bank Goldman Sachs has projected that oil could reach $120 per barrel if regional hostilities persist.
The situation is further complicated by ongoing US-Iran tensions, which have effectively closed the Strait of Hormuz, another critical petroleum corridor. According to commodity intelligence assessments, a month-long pipeline outage would result in the loss of approximately 120 million barrels of exportable oil. Middle East analysts note that current conditions represent a convergence of multiple supply-threatening scenarios affecting Saudi Arabia’s export capacity and global energy stability.
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