Saudi Faces ‘Worst Crisis’ as Houthi Attacks Mount and US Withholds Support

Saudi Red Sea bypass route also threatened, facing economic and military pressure

Saudi economy forecast to contract this year

"A monthlong pipeline shutdown could push it to -4.5%"

Lack of ground-combat experience adds to strain

Possibility of coordination with Israel also raised

Saudi Arabia is being cornered by a string of attacks from Iran-backed forces. In the south, Yemen's Houthi rebels have pushed the Bab el-Mandeb Strait, a key export route that bypasses the Strait of Hormuz, toward possible closure. In the north, suspected strikes by pro-Iran militias in Iraq have halted operations on the kingdom's East-West pipeline, a critical infrastructure link. With crude exports that underpin the Saudi economy at risk of being significantly disrupted, fears are also growing over tighter supplies in global energy markets.

Saudi Confronts Its Biggest Crisis

On Sept. 14, the Houthis said they had captured two more islands near the Bab el-Mandeb Strait, a major Red Sea chokepoint. That followed their earlier seizure of Perim Island and the port of Mocha.

Saudi Arabia has effectively lost control of its southern Red Sea shipping route, leaving its export path around the Strait of Hormuz all but blocked. The East-West pipeline, which carries oil to Red Sea ports, was also shut after a drone attack blamed on pro-Iran militias in Iraq. The pipeline can transport as much as 7 million barrels a day and is a key route for moving crude to the Red Sea without passing through Hormuz.

That has fueled expectations of imminent production cuts at Saudi facilities on the Red Sea coast, including the Yanbu refinery and Petro Rabigh.

Crown Prince Mohammed bin Salman, who took effective control of Saudi Arabia in 2017, is facing his biggest crisis yet. Abu Dhabi Commercial Bank projects the Saudi economy will contract 3.1% this year. A one-month shutdown of the East-West pipeline could pull growth down to negative 4.5%. That would be worse than in 2020, when the global economy contracted during the Covid-19 pandemic. Bloomberg said the disruption could also undermine Saudi government plans to attract billions of dollars of foreign investment in industries including data centers, energy and electric vehicles.

The fallout is spreading across the global economy. Brent crude for November delivery settled 2.90% higher at $108.75 a barrel, the highest since May 19. US West Texas Intermediate crude for October delivery rose 4.38% to $105.83 at the close. If the East-West pipeline remains shut for a month, global crude supply would fall by 120 million barrels, according to Kpler.

The supply hit is already becoming visible. Reuters, citing sources, reported that Saudi Arabia has reduced crude shipments to Europe.

Few Good Options for a Response

Saudi Arabia has limited options. Eurasia Group told the Financial Times that the kingdom faces a policy dilemma. It cannot bow to military pressure and accept Houthi demands, while a broader war could cost it half of Aramco's oil production.

The bigger problem is that Saudi Arabia would struggle to beat back the Houthi offensive on its own. Retaking islands and ports near the Bab el-Mandeb Strait would require a ground operation, but the Saudi army has little battlefield experience. A defeat could leave the kingdom's mainland under threat.

Its main allies have shown little willingness to help. Crown Prince Mohammed bin Salman requested military support from US President Donald Trump and UK Prime Minister Andy Burnham, but neither signaled any intent to provide it. The US is already burdened by its war with Iran. With November midterm elections approaching, Trump is unlikely to deepen US involvement in another Middle East conflict. The Financial Times said Pakistan and Turkiye, both of which have mutual defense agreements with Saudi Arabia, would also find it difficult to send ground troops to Yemen.

Some analysts have raised the possibility that Israel and Egypt could support Saudi Arabia. Houthi control of the Red Sea would also pose a security threat to Israel. The Wall Street Journal said that with Israel already confronting Hamas in the west, Hezbollah in the north and Iran in the east, it would not want the threat from the south to intensify as well.

For Egypt, instability along the Red Sea shipping route would also bring economic pressure. If the conflict widens, Suez Canal fee revenue, equivalent to 2% of gross domestic product, could decline. Crown Prince Mohammed bin Salman visited Egypt on Sept. 16 to discuss ways to cooperate on ensuring freedom of navigation in the Red Sea.

Han Myung-hyun, Hankyung.com reporter, wise@hankyung.com