The Houthi rebel militia in Yemen has expanded its military presence at the southern entrance to the Red Sea, increasing economic pressure on Egypt through potential disruptions to Suez Canal traffic. While Houthi spokespeople have stated that non-Saudi vessels may continue to transit the waters, the group now controls the strategic Mayun (Perim) island and other coastal areas, signaling a tightening grip on one of the world’s busiest maritime chokepoints.
The Bab el-Mandeb Strait, which connects the Red Sea to the Gulf of Aden, remains a critical artery for global trade. Although recent data from Reuters indicates that daily ship traffic has not drastically fallen—with 24 vessels passing on Saturday and 27 on Sunday—maritime intelligence firm Kpler reports a significant decline from the July average of 47 ships per day.
For Egypt, any reduction in Red Sea shipping directly impacts the Suez Canal, a cornerstone of national income. Before the current security crisis, Egypt earned between $9 billion and $10 billion annually from the canal. However, Houthi attacks beginning in late 2023 caused revenues to drop by approximately $6 billion in 2024, according to the International Monetary Fund.
Recent efforts toward recovery appeared promising, with the Suez Canal Authority reporting a 23% revenue increase to $4.67 billion for the 2025-2026 fiscal year, partially driven by higher oil prices that made rerouting around Africa less attractive. Experts warn, however, that the Houthi offensive could reverse this trend.
Stephan Roll, a senior fellow at the German Institute for International and Security Affairs (SWP), noted that while Houthi control of the Bab el-Mandeb Strait does not guarantee control of the Suez Canal, it provides them with significant leverage to indirectly threaten traffic between Asia and Europe.
The situation is further complicated by parallel instability in the Persian Gulf. Following drone attacks attributed to Iraqi groups, Saudi Arabia’s east-west pipeline to Yanbu will be out of service for several weeks. This pipeline was transporting 4 million to 5 million barrels of oil daily as an alternative route while the Strait of Hormuz remains threatened by the ongoing US-Iran conflict. Analysts warn that the simultaneous destabilization of both the Red Sea and Persian Gulf routes poses a severe risk to global energy supplies.
Egypt finds itself in a delicate geopolitical position. Historically, Cairo maintained strong ties with Saudi Arabia, remaining a formal member of the Saudi-led coalition against the Houthis, though experts describe its participation as largely symbolic. The memory of Egypt’s costly military intervention in Yemen during the 1960s continues to influence its current policy of restraint.
Steffen Krüger, head of the Konrad Adenauer Foundation’s Cairo office, emphasized that Egypt’s military capabilities are limited, leaving diplomacy as its primary tool. “The Egyptians simply have no real alternative,” Roll stated. “They have to try to put a positive spin on a bad situation and somehow negotiate appropriate arrangements with the Houthis.”
Tensions over diplomatic engagement surfaced recently when the Houthis offered to hold direct talks with Cairo regarding shipping security, facilitated by the International Chamber of Shipping in London. According to The New Arab, Egypt rejected the proposal on September 14, fearing it would be interpreted as recognizing Houthi authority.
Saudi Crown Prince Mohammed bin Salman visited Cairo on Tuesday to seek Egyptian support against the Houthi threat, but analysts suggest Egypt is likely to adopt a wait-and-see approach. The ultimate impact on Egypt’s economy will depend on whether the Houthis escalate their restrictions beyond Saudi-linked vessels and how severely they disrupt international maritime traffic.
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