How Iran-linked Houthis’ Red Sea shipping threat risks bigger oil shock

TEHRAN - One thing that’s helped limit the Iran war’s disruption to global oil supply is the ability of Saudi Arabia to use an alternative export route to the Strait of Hormuz: the Red Sea.

The fragility of this workaround was laid bare after the Houthis, an Iran-backed militant group that controls part of Yemen, declared a “complete and total ban” on Israeli ships in the area, saying that these vessels are “legitimate military targets.”

The Houthis previously attacked ships near the Bab el-Mandeb Strait, which connects the southern Red Sea to the Gulf of Aden, from 2023 to 2025.

This was in retaliation against Israel’s war in Gaza, but the group’s definition of vessels linked to Israel proved to be very broad, and the threat to commercial shipping caused traffic through the waterway to collapse.

How important is the Red Sea trade route? 

The combination of the Suez Canal, Red Sea and Bab el-Mandeb Strait is a shortcut for ships to travel between Europe and Asia. 

Close to 10 per cent of global seaborne trade passed through Bab el-Mandeb annually before the Houthi strikes began in 2023. That share had fallen to around 3 per cent last year, based on data from Clarksons Research and the PortWatch platform from the International Monetary Fund and Oxford University.

Several waves of Houthi attacks in recent years have prompted ship operators to avoid the Red Sea. Many send their vessels around the southern tip of Africa instead – an expensive diversion that’s thousands of miles longer and can add two weeks to journeys.

Bab el-Mandeb is still a significant conduit for oil, gas and other commodity exports from the Middle East, Asia and Russia. Traffic has ticked up during the Iran war as Saudi Arabia uses the waterway to keep its oil exports flowing.

How could a renewal of Houthi attacks affect the oil market?

The Houthis said on June 8 that their ban applies to Israeli maritime navigation in the Red Sea. In the past, they’ve used a loose definition of what constitutes a ship linked to Israel and escalated their campaign to include other vessels.

At the time of the June announcement, the group had not targetted any merchants ships in the area since September last year, according to maritime security firm Ambrey. If its attacks were to resume and become widespread, that could jeopardise oil exports from Saudi Arabia’s Red Sea port of Yanbu, which the kingdom has leaned on to bypass Iran’s effective closure of the Strait of Hormuz.

Saudi Arabia is the biggest crude exporter in the Persian Gulf and has been diverting more oil along a pipeline to its western coast. It shipped 3.65 million barrels a day of crude via Yanbu in May, equivalent to just over half the country’s total pre-war exports.

In order to pick up these oil cargoes and ferry them to customers in Asia, ships need to sail through the narrow Bab el-Mandeb waterway and past Yemen’s rugged coastline, which provides cover for Houthi attacks. If tankers are unable to take this route due to safety risks, oil prices could surge even higher.

Why are the Houthis only getting involved in the war now?

While the Houthis repeatedly warned that they could close the Bab el-Mandeb Strait after the Iran war broke out, they largely stuck to the sidelines of the conflict. Their June declaration of a partial blockade of the Red Sea coincided with a flare-up of strikes between Iran and Israel.

The militia group has been in a weakened state since US and Israeli air strikes last year killed many of its leaders and destroyed a lot of its military equipment. That said, the US warned in March that the Houthis could pose a threat to Red Sea shipping, flagging the potential use of unmanned aerial and underwater vehicles, ballistic and cruise missiles, and illegal boardings.

While Iran is the group’s most important backer, the Houthis have their own strategic calculations and don’t automatically act at Tehran’s command. There are risks to entering the broader regional war, including likely retaliation from the US and Israel. 

The Houthis may also be wary of threatening the interests of Saudi Arabia. They agreed to a truce with the kingdom in 2022, which has largely held and involved the Saudi government making some payments to areas under Houthi control.

Who are the Houthis?

Officially known as Ansar Allah, or Followers of God, the Houthis are part of a clan that hails from Yemen’s northwestern Saada province. They are followers of the Zaidi branch of Shiite Islam, which accounts for an estimated 25 per cent of the country’s population. 

The Houthis emerged in the 1990s after North Yemen and South Yemen were unified, waging a series of rebellions against the government. They seized control of capital Sanaa in 2014, launching a civil war that still divides Yemen. The group also control portions of the northwest of the country, including much of the Red Sea coast. 

The Houthis are anti-West and anti-Israel, and are designated terrorists by the US and European Union.

They are part of Iran’s so-called axis of resistance, which includes Hamas in Gaza and Hezbollah in Lebanon, both of which are also classified as terrorist organisations by the US and others. These groups receive training, technical expertise and weapons from the Islamic Republic.

The Houthis do not rely solely on Iran for arms. They can also draw upon tribal smuggling networks inside Yemen and commercial links to defense export hubs such as China. The group has expanded efforts to assemble and manufacture its own weapons.

Why did the Houthis start their attacks in 2023?

The Houthi aggression began shortly after Israel initiated its military campaign in Gaza in response to the Hamas attacks in October 2023. The Houthis initially fired drones and missiles toward Israel, before moving on to targeting ships.

The group originally said it was only focused on vessels with links to Israel. But ships without a direct connection were also hit. After the US and UK began to strike Houthi assets in early 2024, the militants said all ships from these two countries were legitimate targets. 

How have the US and others tried to counter Houthi attacks in the past? 

The wave of Houthi attacks in 2023 prompted the US to establish an international task force, known as Operation Prosperity Guardian, to protect vessels in the area. More than 20 countries contributed ships, personnel and information to the effort. 

The US and UK launched a series of strikes on Houthi positions from January 2024, and in February of that year, the EU began a defensive naval mission, called Aspides, to offer security for Red Sea shipping.

When President Donald Trump returned to the White House last year, his administration undertook an almost two-month cruise missile and bombing campaign against the Houthis. This was brought to an end by an Oman-brokered ceasefire in May 2025, in which the Houthis agreed to stop targeting US ships. Operation Prosperity Guardian was also wound down.

The Houthis continued to attack some other vessels and launch long-range strikes against Israel, only suspending this activity in late 2025 after Hamas and Israel reached a ceasefire. BLOOMBERG