Houthis enter the Israel-Iran War. More energy shocks to come?
A month into the US-Israel-Iran War, the crisis has expanded to the entire region. And Yemen has now entered the fray, launching missiles and drones at Israel on March 28.
At the centre is the Shia political and military organisation Ansar Allah, more popularly known as the Houthis. The Tehran-backed group said it will continue its attacks in support of allies across the region, including Palestine, Lebanon, Iraq, and Iran.
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Control over Bab el-Mandeb
The Houthis control Sanaa and the north-west of Yemen, including the Red Sea coastline. What makes the Houthis particularly important right now is their control of the territory near the Bab el-Mandeb Strait, a narrow but important sea route. This passage connects the Indian Ocean to the Red Sea and onward to the Suez Canal, making it essential for trade between Asia and Europe.
Around 15 per cent of global trade passes through this route, including shipments of oil, gas, and everyday goods. About 20 per cent of energy trade passes through the now restricted Strait of Hormuz. If both routes are disrupted, nearly one-fourth of the world’s maritime trade could be affected.
Global trade disrupted
Notably, since late 2023, the Houthis have carried out hundreds of attacks on ships in the Red Sea, disrupting global shipping, amid the Israel-Gaza War.
According to a Gulf News report, many ships have so far been targeted, forcing many companies to reroute around Africa, adding up to two weeks to travel time. This has increased costs, delayed deliveries, and strained global supply chains. Egypt has also faced losses due to reduced traffic along the Suez Canal.
The impact extends to energy markets as well. Oil shipments through the region have dropped sharply, and liquefied natural gas flows have been severely disrupted, contributing to rising prices and supply uncertainty.
The impact is also clearly visible in global energy markets. Oil shipments along this route dropped sharply, from about 9.3 million barrels per day in 2023 to around 4.1 million in 2024. LNG shipments were hit even harder, falling to almost zero between the end of 2024 and the first half of 2025.
Effect of the recent attack
On Monday, after the Houthis launched their first attacks on Israel amid the ongoing war, Brent Crude futures jumped by $3.20, or 2.8 per cent, to $114.35. The US West Texas Intermediate was up $1.87, or 1.9 per cent, at $101.51 after a 5.5 per cent gain in the previous session.
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