The Houthis launched missiles toward Israel, opening a new front in the conflict. Yanbu Port and the Bab el-Mandeb Strait, which enable Saudi Arabia to bypass the Strait of Hormuz and transport over 3.4 million barrels of oil per day, are within the range of Houthi missiles. The energy market’s last 'buffer plan' is now at significant risk. Brent crude has surged above $115, while US stocks have fallen to a seven-month low.
The Houthi forces have formally entered the Iran war, posing a new shockwave to the global energy market.
According to reports by Xinhua News Agency, the Houthi forces in Yemen issued a statement on the 28th through the Masirah TV station under their control, stating that the organization had launched ballistic missiles at Israel in the early hours of the day and that the operation would continue until the aggression ceased.
This move signifies the opening of a new front in the war, with the Bab-el-Mandeb Strait at the southern end of the Red Sea once again exposed to risk.
Saudi Arabia transports crude oil via its East-West pipeline to Yanbu Port, then ships it out through the Bab-el-Mandeb Strait, which serves as the core alternative route for crude oil transportation after the Strait of Hormuz was blocked. Since March, daily crude oil loading volumes at Yanbu Port have climbed to approximately 3.4 million barrels, with some single-day flows exceeding 5 million barrels this week, setting a historical record.
Meanwhile, Iran launched retaliatory strikes against Gulf Arab states and Israel on Saturday. Fires broke out in Abu Dhabi’s industrial zone in the UAE, Kuwait's airport radar system was severely damaged by drones, and Oman’s Salalah Port was forced to halt operations.
Expectations of a ceasefire in the energy market have cooled, with Brent crude closing above $115 per barrel on Friday, marking an accumulated increase of about 60% since the outbreak of hostilities.
The entry of the Houthi forces has sharply increased the risks in the Bab-el-Mandeb Strait.
The participation of the Houthi forces in the war introduces a highly sensitive geopolitical variable into this conflict. The Bab-el-Mandeb Strait is a critical passage linking the Red Sea to the Gulf of Aden, ranking alongside the Strait of Hormuz as one of the two most crucial global energy shipping channels.
Following the outbreak of the Israel-Hamas war in 2023, missile and drone attacks by the Houthi forces have effectively blocked the majority of Western shipping companies from passing through this waterway, and the current situation poses a further risk of deterioration.
Notably, Saudi Arabia is currently bypassing the nearly closed Strait of Hormuz to export oil through the Yanbu Port, which lies entirely within the missile range of the Houthi forces.
Bloomberg previously reported that the United States had issued a warning regarding potential Houthi attack threats near the Bab el-Mandeb Strait, with this risk continuing to escalate as tensions rise.
This means that the alternative export route activated by Saudi Arabia to counter the closure of the Strait of Hormuz is also under direct threat. If the Port of Yanbu is targeted, another critical safeguard for global crude oil supply will be undermined, potentially rendering the market's hoped-for 'buffer plan' ineffective.
Hormuz remains unresolved, and negotiation progress has been sluggish.
Since the US-Israel coalition launched strikes against Iran on February 28, the Strait of Hormuz has been nearly closed. Under normal circumstances, about one-fifth of the world’s oil and liquefied natural gas passes through this waterway.
Trump pushed forward negotiations this week, extending the deadline for Tehran to reopen the Strait of Hormuz to April 6 and presenting a 15-point proposal. The core conditions include:
Iran dismantles its nuclear facilities and reduces its missile stockpile in exchange for sanctions relief. Iran rejected this proposal, insisting on demands for war reparations, recognition of some form of control over the Strait of Hormuz, and guarantees that the US and Israel will cease attacks on Iran.
According to media reports citing informed sources, US Secretary of State Marco Rubio stated in a call with G7 counterparts on Friday that the war would end in weeks rather than months.
Trump’s envoy Steve Witkoff also indicated that a meeting between the US and Iran might take place 'this week,' with Pakistan considered the most likely venue for negotiations.
The foreign ministers of Saudi Arabia, Turkey, and Egypt are expected to visit Islamabad on March 29-30 to consult on efforts to de-escalate regional tensions.
Rumors of a ground invasion are heating up, and market sentiment remains under pressure.
By extending the deadline to April 6, Trump also gained more time for the U.S. to build up its military presence in the region, fueling speculation about potential ground deployments.
According to media reports citing military analysts, if Trump decides to deploy ground forces, he may choose to seize Kharg Island in the Persian Gulf—a small island through which nearly all of Iran's oil exports pass.
The U.S. might also seek to control the Iranian side of the Strait of Hormuz to forcibly reopen this crucial waterway for oil, gas, and container ships, or deploy special forces to relocate Iran’s approximately 440 kilograms of highly enriched uranium.
Financial markets have already reacted to the escalating tensions: U.S. stocks fell to their lowest level in over seven months on Friday, while the yield on the 10-year U.S. Treasury bond climbed to near its highest level since July. Fuel shortages are worsening in multiple regions globally, with the Philippines declaring an energy emergency, and economic experts voicing growing concerns about the risk of stagflation.
Editor/joryn