Houthi Advances in Yemen Threaten to Push Global Gas Prices Higher

DUBAI, United Arab Emirates — A fragile truce in Yemen has unraveled further as Iran-backed Houthi forces have advanced along a critical stretch of the Red Sea coast, ousting Saudi-aligned Yemeni troops. The offensive, which saw the Houthis seize the port city of Mokha on Friday, coincides with heightened military tensions in the region, driving global energy markets into volatility and pressuring consumers with soaring fuel costs.

The capture of Mokha, located just north of the Bab al-Mandeb waterway, marks a significant territorial gain for the Houthi rebels. This development follows a week of intensified conflict, during which the group launched missile and drone strikes against four regions in southwestern Saudi Arabia. In retaliation, Saudi forces conducted airstrikes in Yemen, including one that resulted in civilian casualties at a prison facility.

The geopolitical instability has had immediate economic consequences. Brent crude, a key benchmark for global oil prices, surged to nearly $110 a barrel this week. This spike comes amid a separate exchange of fire between the United States and Iran in the Persian Gulf, compounding fears of supply disruptions. Capital Economics, a London-based research firm, warned that the fighting on both sides of the Arabian Peninsula increases the risk of further energy price hikes in the coming weeks.

Domestically, the impact on American drivers has been severe. The American Automobile Association (AAA) reported that U.S. gasoline prices are up 34% compared to the same period last year, averaging $4.28 per gallon. Diesel prices, which are critical for agriculture and logistics, have risen even more sharply, climbing 61%.

Saudi Arabia, the world’s largest oil exporter, is increasingly vulnerable to these regional conflicts. Data from maritime analytics firm Kpler indicates that Saudi oil exports fell to 3.2 million barrels per day last month, their lowest level in over a decade. The country is currently forced to reroute its oil tankers through longer, more expensive passages, bypassing Houthi-controlled waters in the Bab al-Mandeb strait and navigating the Suez Canal or around Africa to reach Asian markets.

Previously, Saudi Arabia had utilized an east-west pipeline to the Red Sea as a contingency measure after Iran closed the Strait of Hormuz in response to the U.S.-Israeli war. However, Houthi attacks have disrupted even these alternative routes. Saudi officials confirmed that Houthi strikes on oil facilities earlier in the week sparked fires that halted operations and wounded more than 70 people.

As a key stabilizer within OPEC, Saudi Arabia’s inability to maximize exports due to these conflicts has led other nations to draw upon emergency oil reserves to fill the gap, further driving up prices. Despite the higher oil prices helping Gulf producers offset some losses from reduced export volumes, the kingdom faces growing budget deficits exacerbated by the attacks on shipping lanes in the Strait of Hormuz.

The humanitarian toll of the renewed fighting is also mounting. The United Nations’ International Organization for Migration reports that at least 18,500 people have been displaced in the past 72 hours due to clashes for control of Mokha and other areas along Yemen’s western coast. The agency notes that families are fleeing with nothing, arriving at humanitarian sites that are already critically short on emergency food and shelter supplies.

This latest escalation occurs 11 years after Saudi Arabia first led a coalition of Arab countries into Yemen to counter a Houthi takeover of the capital, Sanaa. Despite over a decade of conflict, the Houthis continue to control Sanaa and have now expanded their influence along the Red Sea coastline.