Pipeline shutdown and Houthi push toward Bab Al Mandab tighten squeeze on Saudi oil exports

The pressure on Saudi Arabia’s oil export routes increased over the weekend, with a Houthi advance up Yemen’s Red Sea coast and drones from Iraq striking the country’s main oil pipeline. This comes as the Kingdom’s crude output is already at its lowest rate in more than three decades.

ICYMI- The Houthis struck Abha, Khamis Mushait, and Jazan with missiles and drones last week, hitting energy facilities and injuring 73 civilians. Saudi-backed forces answered with 54 airstrikes across Yemen’s Al Jawf, Marib, Taiz, Hodeidah, Saada, and Al Bayda provinces.

The pipeline goes down

Saudi Arabia temporarily shut its East-West oil pipeline on Friday after it was targeted by several drones launched from Iraq, causing injuries and damage that is still being assessed, the Foreign Ministry said on X. US President Donald Trump said Iran was probably responsible, Reuters reports.

Riyadh condemned the strike but held back from retaliating after Iraqi Prime Minister Ali Al Zaidi asked for time to prevent further attacks. Baghdad opened an urgent investigation, dismissed the commander of its Maysan province operations, and appointed Major General Ali Abdul Hussein Kadhim in his stead. The Iraqi government has also tasked a committee with identifying those responsible, according to statements from the PM’s media office.

Shut down at a low point: The East-West pipeline is the artery that has been carrying crude from Saudi Arabia’s eastern fields to its Red Sea coast, allowing the Kingdom to move oil around the throttled Strait of Hormuz for the past six months. Supply is already stretched. The International Energy Agency put August supply at 6 mn bbl / d, down 2.3 mn bbl / d from July and the lowest level in over 30 years, Reuters reports. The agency also cut its 2026 forecast for Saudi crude by 885k bpd to 7.6 mn bbl / d, citing a slower GCC production recovery. Crude loadings fell 1.1 mn bbl / d in August to 3.5 mn bbl / d.

The sea front is tightening too

The Houthis are cornering Bab Al Mandab. The group expanded its control over Yemen’s Red Sea coast, reaching the strategic islands of Perim and Hanish and the coastal towns of Mocha and Dhubab, Reuters reports, citing four Yemeni government sources. That puts Houthi forces within roughly 50 km of the strait and in a stronger position to target shipping, threatening the same Red Sea route the pipeline feeds. Houthi military spokesperson Yahya Saree said shipping remained safe except for Saudi vessels, which continues the blockade from July.

What the Houthis are actually after: The advance serves a stack of objectives, Ahmed Al Zurqa, a political analyst and executive director of the Yemeni Journalists Syndicate, tells EnterpriseAM. On the ground, the group wants to recover the coastal areas it was driven out of in 2018, which had given it a maritime outlet for smuggling weapons and receiving Iranian expertise. It also wants to defeat the National Resistance Forces under Tareq Saleh, whom Al Zurqa called one of the Houthis’ most significant potential rivals in any future struggle for power. Taking the coast strengthens the group’s hand against the Yemeni government in Taiz and Aden, and in any eventual political settlement.

The Saudi objective is more direct. The Houthis, Al Zurqa said, want to raise the cost of confrontation for Riyadh and move closer to threatening its Red Sea export corridor through Yanbu. This would give them leverage to push the Kingdom into dropping its support for the Yemeni government and easing the coalition’s air and sea restrictions.

Regionally, he tied the move on Bab Al Mandab to Iran’s wider strategy: Controlling positions along the strait hands Tehran an additional pressure card against the Trump administration, “especially if pressure at Bab Al Mandab coincides with a continuing crisis at the Strait of Hormuz.”

Iran’s hand in the move: Al Zurqa said it’s clear Iran played a central role in planning, training, logistically supporting, and arming the operations, and that the pattern of the attacks carries features familiar from Iran’s Revolutionary Guard and its allied groups. Iranian sources told Reuters that Tehran had pledged additional funding, weapons, and senior officers to the Houthis. Yemeni sources, citing intercepts and captured fighters, said they believed the coastal campaign was directed by Abdolreza Shahlaei, a senior commander in Iran’s Quds Force.

But he drew a careful line. It is essential, Al Zurqa said, to separate Iran’s role in building capability and planning from proof that Tehran ordered each individual attack. What can be said with more confidence, he said, is that “the Houthis have become a core part of Iran’s network of influence and deterrence in the region.” One Reuters source made a similar point from the other side: Tehran met with allies including the Houthis, but the decision to seize Mocha was the group’s own.

What this means for exports, and the economy

The threat works even short of a blockade: “The Houthis don't need to actually close Bab El-Mandeb to create an economic impact,” Al Zurqa said. “Continued attacks, or a credible threat to ships and facilities, is enough to raise ins., shipping, and protection costs and affect tanker movement and market confidence.” That is the mechanism already playing out, with a threatened route becoming a more expensive route regardless of whether a single tanker is stopped.

And a prolonged squeeze reaches past oil: If the escalation drags on, Al Zurqa said, “its effects could extend beyond the oil sector to the broader Saudi economy, through higher security and defense spending and a rising regional risk premium, at a time when the Kingdom is allocating enormous resources to its economic transformation projects and Vision 2030.” This is the same fiscal pressure the Kingdom is already managing as it reins in gigaproject spending elsewhere, now with a second claim on the budget.

The response, and the risk of going wider

Yemen’s government wants to push back, and wants more Saudi help to do it. It plans to deploy weapons to retake Houthi positions around Mocha and the road to Hodeidah, and has asked Riyadh for more air support and strikes on Houthi targets, including Sanaa and oil depots, two Yemeni officials said. Riyadh has limited its support to logistics, weapons, and intelligence, and the officials said it appeared reluctant to launch a broader campaign for fear of triggering heavier Houthi drone attacks on Saudi soil.

The logic in the caution: Lessons from the previous Yemen war showed that air power can weaken Houthi capabilities but cannot, on its own, retake and hold ground, Al Zurqa said. The more effective route, in his view, would be to arm and unify the Yemeni government forces and back them with air, intelligence, and logistical support to fight on the ground, in parallel with strikes on Houthi missiles, drones, and command-and-control positions.

Where’s Washington in all this? Crown Prince Mohammed bin Salman asked Trump for military support against the Houthis, Reuters reports, citing sources familiar with the matter. Washington declined direct military action but offered intelligence-sharing and targeting support. Trump said the Houthis had told his administration they did not want US involvement and were letting most ships pass. Al Zurqa expects Washington to widen intelligence support, air defense, early warning, and protection of facilities and sea lanes if the attacks continue, with any shift to broader offensive involvement depending on the nature and scope of the threat.