Bloomberg: Saudi Arabia threatened to reduce support for the Yemeni government if economic measures were implemented against the Houthis

Bloomberg reported that Saudi Arabia is increasingly concerned about the situation in neighboring Yemen, where Iranian-backed Houthi militants have escalated their hostilities with Israel and threatened to attack the oil-rich kingdom over allegations that it is waging an economic war against them.

Riyadh fears being drawn into a new direct conflict with the Houthis, according to a report by the agency citing several people familiar with the Saudi government’s strategy, who requested anonymity due to the sensitivity of the matter.

According to the report:

Tensions have risen in recent days after a Houthi drone killed a man in Tel Aviv on July 19, to which Israel responded by launching air strikes on the Houthi-controlled port of Hodeidah the next day.

Around the same time, Houthi leader Abdul-Malik al-Houthi claimed that Saudi Arabia was colluding with Israel and the United States to curb the group's attacks on shipping in the Red Sea, which began late last year.

He threatened to inflict “horrific losses” on the kingdom and thwart Vision 2030, Crown Prince Mohammed bin Salman’s multi-trillion-dollar economic and social transformation plan.

The Houthis regularly attacked Saudi Arabia during their war - including its oil facilities - before a fragile truce in 2022. Any resumption of those attacks would likely send crude oil prices higher.

The United Nations said this week that the Yemeni parties had reached an agreement that would lead to the abolition of financial restrictions imposed on Houthi-controlled areas, which are home to nearly 20 million people who depend on international humanitarian aid and remittances from abroad.

The statement acknowledged "the important role of the Kingdom of Saudi Arabia in reaching this agreement."

A Saudi Foreign Ministry official did not respond to requests for comment.

Saudi Arabia and the United States had previously supported central bank measures to pressure the Houthis, believing it would help end maritime hostilities and begin UN-led peace talks to resolve the conflict in Yemen, Bloomberg News reported in early June.

Months of air strikes launched by the US and UK against Houthi targets since January have failed to end the attacks in the Red Sea.

But in recent weeks, the Houthis have escalated their naval campaign to levels not seen since December. They published footage of sites they planned to target in Saudi Arabia, and then launched the attack on Tel Aviv.

It is not yet clear what role the United States played in thwarting these plans. The State Department declined to comment, while the Treasury Department did not respond to a request for comment.

Fatima Abu Al-Asrar, a researcher at the Middle East Institute, said Saudi Arabia faces difficult choices in light of the “big jump” in Houthi capabilities since 2015 — as evidenced by sending a drone about 2,000 kilometers (1,242 miles) from Yemen to... The heart of Tel Aviv. She added that continuing to make concessions would encourage them.

Bernard Heikal, a professor of Near Eastern studies at Princeton University, said that the Saudis are concerned about the possibility of a new confrontation with the Houthis and Iran.

He added, "The Saudis learned the lesson and realized that the Americans may be here today and leave tomorrow, but Iran and the Houthis are here today and will not leave tomorrow."

• Source: Bloomberg