Houthis Open New Front, Threaten Bab el-Mandeb Strait
Yemen's Houthi rebels launched missiles at Israel and warned they may close a second major shipping chokepoint, compounding the Hormuz crisis.
The Iran war just got more complicated. Yemen's Houthi rebels announced Saturday they're entering the conflict, firing ballistic missiles at southern Israel and warning they could close the Bab el-Mandeb Strait—the southern gateway to the Red Sea.
If they follow through, that means two critical maritime chokepoints would be blocked simultaneously: Hormuz in the Persian Gulf handling 20% of global oil, and Bab el-Mandeb controlling the Suez Canal approach. The shipping disruption would be unprecedented.
What Happened
Brigadier-General Yahya Saree, the Houthi military spokesman, announced the attack via satellite broadcast. The group claimed to have targeted "sensitive Israeli military sites" and pledged to continue strikes "until the aggression against all fronts of the resistance ceases."
The Houthis had stayed on the sidelines for four weeks after the U.S.-Israeli attack on Iran that killed Supreme Leader Ali Khamenei on February 28. Their entry now, as the war enters its fifth week, signals either Tehran called in the favor or the group calculated the time was right.
Either way, it adds complexity to an already chaotic situation. The Hormuz blockade has already driven oil to $113 per barrel and pushed the Dow into correction. A second chokepoint closure would multiply the damage.
The Bab el-Mandeb Threat
The Bab el-Mandeb Strait sits between Yemen and Djibouti at the southern entrance to the Red Sea. Any ship heading through the Suez Canal must pass through this 20-mile-wide channel. About 12% of global trade transits this route.
The Houthis disrupted this corridor in 2024 during the Gaza war, forcing shipping companies to reroute around Africa. Container rates spiked. Delivery times lengthened by weeks. The disruption contributed to inflation pressures through mid-2024.
This time the stakes are higher. With Hormuz already blocked, global supply chains are under maximum stress. A Bab el-Mandeb closure wouldn't just add shipping days—it would create cascading bottlenecks as vessels compete for limited alternative routes.
Market Implications
Oil extended gains in overnight trading following the Houthi announcement. Brent crude touched $114 before settling near $113. The previous week's oil rally reflected Hormuz risks alone. Bab el-Mandeb adds another layer.
The energy sector remains the only winner. XLE is up 25% year-to-date while everything else bleeds. Devon Energy, Patterson-UTI, and other domestic producers keep making new highs. The divergence between energy and the rest of the market is the widest since 2020.
For the broader market, the Houthi entry reinforces the bear case. This war isn't winding down—it's expanding. Trump administration officials have suggested a resolution is near, but ground realities suggest otherwise. Five weeks in, the conflict has added Yemen, shown no sign of Hormuz reopening, and put a second chokepoint at risk.
What to Watch
The Houthis control significant territory along Yemen's Red Sea coast and have demonstrated the ability to strike shipping. Their 2024 campaign lasted months and cost global commerce billions.
Key questions for traders:
Will they actually close Bab el-Mandeb? The warning is clear, but execution requires sustained military operations. The U.S. Navy presence in the region complicates matters.
How does this affect diplomatic efforts? The 15-point ceasefire plan that Iran rejected last week didn't account for Houthi participation. Any deal now needs to address multiple fronts.
Is there an off-ramp? The Houthis have their own agenda distinct from Tehran's. Even an Iran deal might not silence Yemen immediately.
None of these questions have easy answers. For now, assume continued volatility. Monday's futures bounce looks fragile against headlines like this. The market wants to believe resolution is coming. The facts on the ground suggest otherwise.