OPINION | The Houthi storm: How Yemen’s war threatens the global economy

The war in Yemen has suddenly acquired a significance far beyond its borders. Over the past fortnight, the Iran-aligned Houthi movement—Ansar Allah—has rapidly expanded its hold over Yemen’s Red Sea coastline, capturing the strategic port of Mokha and islands near the Bab al-Mandeb Strait.

This is not merely another reversal in a long-running civil war; it establishes a dangerous position where the Houthis can threaten one of the world’s most critical maritime chokepoints. Occurring alongside severe disruptions in the Strait of Hormuz driven by the wider US-Iran conflict, this dual vulnerability poses a profound threat to global energy security, international trade, and the post-World War II system of freedom of navigation.

While military control of adjacent land and the ability to interdict shipping differ from sovereign legal control under international law, that distinction offers little comfort to commercial shipowners operating in the area.

From local rebellion to regional power

The Houthis did not begin as an Iranian proxy. The movement emerged in northern Yemen as a Zaydi Shia religious and cultural revival. Zaydism differs from the Twelver Shia tradition dominant in Iran, and the Houthis’ original grievances were local: political marginalisation, corruption, economic neglect, and opposition to expanding Saudi and Salafist influence in their home regions.

After fighting the Yemeni government sporadically from 2004 onward, the Houthis capitalised on the instability following the 2011 Arab Spring. In September 2014, they seized the capital, Sanaa. When President Abd-Rabbu Mansour Hadi fled, Saudi Arabia assembled an Arab coalition in March 2015 to restore the internationally recognised government and prevent an Iranian-aligned force from establishing itself along its southern border.

That intervention transformed a domestic conflict into a regional war. Iran’s support subsequently intensified. Tehran provided technology, training, missiles, and drones, turning a local insurgency into a sophisticated force capable of striking targets across Saudi Arabia, launching attacks toward Israel, and threatening international shipping lanes.

Nevertheless, the movement retains its own Yemeni priorities and decision-making structures, operating as a partner with strategic alignment rather than a pure puppet.

The roots of Saudi-Houthi hostility

The deep antagonism between Saudi Arabia and the Houthis stems from four key factors:
Geography: A hostile armed movement on Saudi Arabia’s southern border presents a direct security challenge.

History: Riyadh has traditionally viewed Yemen as part of its immediate security perimeter and supported successive central governments, whereas the Houthis were formed in opposition to Saudi political and religious influence.
 
Ideology: The Houthis define their movement through opposition to the United States, Israel, and pro-Western Arab governments—placing Saudi Arabia directly in their crosshairs.

War legacy: The 2015–2022 campaign caused severe civilian suffering through Saudi air operations, while Houthi missile and drone strikes repeatedly targeted Saudi cities and critical infrastructure.

Neither side achieved a decisive military victory. The Houthis survived, and Saudi Arabia eventually sought a negotiated exit. Although a 2022 UN-brokered truce significantly reduced major combat operations, it failed to resolve underlying political and economic rivalries. Yemen remained partitioned, with the Houthis controlling Sanaa and the populous north-western highlands, while rival coalition-backed authorities held territory elsewhere.

Escalation and the wider regional clash

The immediate catalyst for the renewed fighting is tied directly to the broader US-Israel-Iran confrontation. Following the outbreak of the Gaza war, the Houthis began targeting commercial vessels in the Red Sea under the banner of Palestinian solidarity. This campaign forced a significant portion of international maritime traffic to divert around the Cape of Good Hope, adding substantial transit time and freight costs.

The current offensive marks a further escalation. Renewed fighting between the Houthis and Saudi Arabia was primarily triggered in July 2026 when Saudi-led coalition airstrikes targeted the runway at Sanaa’s International Airport to block a flight carrying a Houthi delegation returning after the Iranian Supreme Leader’s funeral. The Houthis have responded by imposing a naval blockade on Saudi shipping lanes in the Red Sea and also bombing the Saudi East-West Pipeline, which bypasses the Bab-el-Mandeb and Hormuz Straits.

Capitalising on the strategic distraction caused by the regional conflict with Iran and the fragmentation of rival Yemeni factions, the Houthis advanced along the Red Sea coast in September 2026 to secure key coastal positions near the Bab al-Mandeb Strait.

This has reignited direct military engagements with Saudi Arabia, creating a reinforcing feedback loop.

Through this chain of events, the Houthis have leveraged Yemen’s physical geography to gain strategic leverage over the wider region.

The strategic importance of Bab al-Mandeb

At its narrowest point, the Bab al-Mandeb Strait is roughly 29 kilometres wide, serving as the southern gateway connecting the Red Sea and Suez Canal to the Gulf of Aden and the Indian Ocean. Under normal operational conditions, approximately 12 per cent of total global trade and 7.4 million barrels per day of crude and refined petroleum products pass through this critical corridor.

The vulnerability of Bab al-Mandeb becomes especially acute when paired with instability in the Strait of Hormuz. Hormuz controls the primary maritime exit for Persian Gulf energy exports, while Bab al-Mandeb links those flows—and broader East-West container traffic—to European and Atlantic markets.

Simultaneous disruption across both waterways generates immediate systemic consequences:
 * Extended transit routes around Africa for commercial shipping.
 * Escalating maritime insurance premiums and freight charges.
 * Supply chain delays impacting fuel, food, fertilizer, and manufactured goods.
 * Increased energy import costs for major consumption hubs in Europe and Asia.

Challenging the post-1945 maritime framework

The modern global trade system relies on open sea lanes, predictable energy distribution, and the enforced freedom of navigation. Historically, the United States provided the primary security umbrella guaranteeing these maritime routes. However, with Washington simultaneously managing crises across multiple operational theatres, its capacity and willingness to initiate another major ground or naval intervention in Yemen remain constrained.

This dynamic illustrates a shift in asymmetric warfare: non-state actors using relatively low-cost drones, anti-ship missiles, and sea mines can place high-value commercial and naval vessels at risk. Denying safe passage through a narrow waterway no longer requires full command of the seas; establishing an ongoing risk to transit is sufficient to divert commercial trade.

Energy market dynamics and geopolitical triggers

Crude oil markets have reflected this instability, with Brent prices topping $100 per barrel during periods of heightened strain before stabilising somewhat.

Going forward, the trajectory of energy markets and maritime security will depend on three main variables:

Duration of disruption at Hormuz: Persistent restrictions in the Gulf force greater reliance on land pipelines and Red Sea export routes, raising the strategic importance—and vulnerability—of Bab al-Mandeb.
 
Saudi export infrastructure: While Saudi Arabia maintains alternative pipeline capacity to move oil to its western ports, these routes cannot entirely replace standard maritime transit volumes through both straits.
 
Iranian strategic intent: Tehran may view Houthi pressure on maritime lanes as useful geopolitical leverage. However, prolonged disruptions that threaten Chinese energy imports could prompt diplomatic friction, as Beijing relies heavily on stable Gulf crude supplies. Reports of Chinese diplomatic outreach to Tehran regarding Red Sea security underscore these concerns.

Potential trajectories

The crisis is moving toward three possible operational outcomes:

Prolonged consolidation: The Houthis maintain their positions along the Red Sea coast and conduct selective interdictions, keeping maritime insurance rates elevated and energy markets unstable.
 
Major counteroffensive: Saudi-backed forces launch a large-scale campaign to clear the coast, risking a prolonged ground war that drags Riyadh back into a protracted conflict.
 
Diplomatic settlement: External powers broker an agreement involving Saudi Arabia, the Houthis, Iran, and Yemeni stakeholders to stabilise the coastline and guarantee passage through the strait.

Restoring the diplomatic channels established during the 2023 Saudi-Iran normalisation deal offers the most viable path toward preventing further escalation.

Strategic implications for India

For New Delhi, the disruption of key Western Asian sea lanes presents direct economic and strategic challenges:

Energy and trade security: India relies heavily on imported crude oil and sea-based freight. Concurrent risks at Hormuz and Bab al-Mandeb directly affect import bills, refining costs, and trade stability.

Comprehensive regional strategy: India’s bilateral relationships with Saudi Arabia, Iran, the UAE, Israel, and the US must be integrated into a unified West Asian maritime security posture spanning the Arabian Sea, Gulf of Oman, and Red Sea.
Naval resilience: Practical measures—including naval escorts for flagged vessels, strategic petroleum reserves, and flexible routing options—need continuous integration across national defence and shipping frameworks.

Diplomatic engagement: Utilizing its working relationships across Riyadh, Tehran, and Washington, India is well-positioned to quietly support de-escalation initiatives and regional maritime stability.

Adapting to asymmetric threats: The proliferation of long-range precision strike capabilities among non-state actors means maritime disruption can endure well beyond traditional state-on-state conflicts.

Conclusion

The advance along Yemen's Red Sea coast by the Houthis represents more than a local tactical shift; it demonstrates how asymmetric military tools can leverage geography to disrupt global commerce. When access through major maritime chokepoints is conditioned on regional political conflicts, the economic impact is felt globally.

Addressing this crisis requires a combination of targeted maritime deterrence, diplomatic engagement, and regional political accommodations. The primary challenge is no longer preventing a localized war from spreading, but managing an environment where international trade infrastructure has already become central to the conflict.

(Lt Gen Philip Campose (Retired) is a former Vice Chief of the Indian Army. He has authored a book titled ‘A National Security Strategy for India: The Way Forward’)

(The opinions expressed in this article are those of the author and do not purport to reflect the opinions or views of THE WEEK.)