A renewed campaign of asymmetric attacks by Yemen’s Houthi movement since late 2020 is aimed at pushing Saudi Arabia to consider concessions in eventual negotiations, and to increase Iran’s leverage over regional shipping and oil supplies. The risk of attack on marine and oil infrastructure will continue to rise in the six-month outlook with notable implications for insurance premiums.

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On 15 January, the Royal Saudi Air Defence Forces (RSADF) reportedly intercepted and destroyed three unmanned combat aerial vehicles (UCAV). The exact time and the date of the incident remains unclear. However, Saudi authorities have blamed the Houthis, an Iranian-backed armed movement that is engaged in a civil war against Yemen’s internationally recognised and Saudi Arabian-backed government. The RSADF reported the drones were launched from the Yemeni port city of Hodeidah, though the intended target was not specified. There were no immediate reports of casualties or damage.

Nevertheless, there is a clear pattern of escalation in the regional conflict that PANGEA-RISK assesses further in this analysis briefing. This was the latest incident in a series of hostile attacks that have emanated from the Houthis since November 2020, indicating a possible relaunch of an attrition campaign against Saudi Arabia.

Rise in asymmetric attacks


Since 2015 the Houthis have carried out numerous maritime attacks in the southern Red Sea, as well as several high-profile drone and missile strikes within Saudi Arabia. Although Saudi Arabia claims to have intercepted most of these attacks, the Houthis have successfully targeted the Saudi capital city Riyadh and strategic Saudi infrastructure on multiple occasions, including ports, oil facilities, and airports.

The most serious attack in this series was the Houthi-claimed September 2019 attack on Saudi oil facilities in Abqaiq, which US intelligence assessed was conducted from inside Iran, not Yemen. However, unquestionably Saudi Arabia was then struck at its most valuable asset. The attack damaged processing trains and storage tanks at the Abqaiq stabilisation plant, the world’s largest of its sort. It also disrupted Saudi production by about 5 million barrels per day (bpd) nearly half the kingdom’s output. While attacks have tapered off after September 2019, they have now re-intensified, as listed below.

  • On 25 December 2020, an unidentified commercial cargo vessel reportedly struck a sea mine in the southern Red Sea off the coast of Saudi Arabia.
  • On 14 December 2020, Saudi Arabian authorities confirmed an external party had caused an explosion on a Singapore-flagged oil tanker while discharging at Jeddah Islamic Seaport. The exact cause of the blast has not been disclosed; however, the use of naval mines or possibly a waterborne improvised explosive device (WBIED) was suspected.
  • On 9 December 2020, Saudi naval forces reportedly intercepted and destroyed two WBIEDs in the southern Red Sea.
  • On 25 November 2020, Saudi officials blamed Houthi rebels for an explosion that damaged a Maltese-flagged oil tanker while berthed at the Saudi port of Al Shuqaiq.
  • On 23 November 2020, Houthis claimed responsibility for a missile attack against a Saudi Aramco oil distribution facility in the Burayman area of Jeddah.
  • On 11 November 2020, Houthi forces reportedly attempted to attack oil infrastructure at a port terminal in Jazan; the incident resulted in a limited fire at the facility after Saudi forces managed to intercept and destroy two WBIEDs used in the attack.

Effort to boost leverage ahead of future peace talks


These attacks came in the context of a steady escalation in fighting between Saudi-backed forces loyal to the internationally recognised Yemeni President Abd Rabbu Mansour Hadi and the Houthis in Ma’rib Governorate. They also reflect the current impasse in peace talks brokered by the United Nations, which have failed to produce any tangible outcome since the Hodeidah ceasefire was signed in December 2018.

Houthi leaders have assumed that the US was expected to exert pressure on Saudi Arabia to reach a political settlement in Yemen under a new US foreign policy direction of the incoming administration of Joe Biden. The Houthis have sought to use the threat to shipping assets and to Saudi strategic assets to gain leverage over their militarily superior coalition enemies, presumably to increase pressure on Saudi Arabia to agree to a settlement on favourable terms.

US labels Houthis as terrorists


However, with only a few days remaining in office, President Donald Trump’s administration classified Yemen’s Houthis as a foreign terrorist organisation citing the series of attacks on oil tankers in the Red Sea. According to US Secretary of State Mike Pompeo, the designation, which will take effect on 19 January 2021 – the day before incoming president Joe Biden is sworn into office – will give the US “additional tools” with which to counter security threats in the region.

These actions from the outgoing administration are likely deliberately aimed at hampering the incoming administration’s foreign policy, locking the US into an unchangeable foreign policy stance on Iran and Yemen (for US policy on Iran see IRAN: TOO MANY SPOILERS WILL PRECLUDE BIDEN’S SWIFT RETURN TO A DEAL). For Saudi Arabia, the labelling of the Houthis as a foreign terrorist organisation could generate counterproductive effects. A political compromise to end the conflict, which Saudi Arabia has increasingly sought, especially since the UAE left its coalition in 2019, now becomes more difficult to navigate.

In response to the designation, the Houthis are likely to escalate border attacks and force Saudi Arabia to retaliate. Not to mention that the “terrorist” designation and its implications would further push the Houthis into Iran’s influence. It will also by extension complicate the incoming US leader’s promised efforts to restart diplomacy with Iran. It is unclear, for the time being, if the incoming Biden administration will aim to reverse the terrorist designation. Such a process would be complex, time consuming, and there may be insufficient political support in Washington DC to reverse the decision.

Iran’s geopolitical dimensions

The maritime insurgency provides additional strategic benefit to the Houthis’ main regional supporter. Iran has long maintained a strong relationship with the Houthis, and since the outbreak of the war in 2015 has supplied weapons and equipment to the movement. Iranian rocket technology has been used by the Houthis and allied forces in Yemen, and US and Saudi-led coalition naval forces have seized small and medium weapons shipments from Iran likely destined to Houthi-controlled ports. Iranian intelligence ship Saviz is permanently anchored in the Southern Red Sea. This acts as a forward base, increasing the Iranian regime’s footprint in the region.

The WBIEDs employed by the Houthis also bear hallmarks of Iranian assistance in their manufacture and employment: their guidance systems use Iranian-made commercial parts and a Farsi-scripted keyboard, indicating that it was likely designed by Iranian technicians.

Besides domestic political advancements, Iran sees the Houthis as a means to leverage pressure on the Red Sea marine traffic chokepoint, just as it has done in Strait of Hormuz at the mouth of the Arabian Gulf. In this context, Iran’s threat to retaliate at a time and place of its choosing for the assassination on 27 November 2020 of the country’s leading nuclear scientist (which it blamed on Israel, acting with US support) suggests that the ongoing attacks might be part of a campaign of asymmetric reprisals.

The latest and ongoing episodes of asymmetric attacks delivers the broader message that the Saudi oil sector, which is Saudi Arabia’s economic lifeblood and of critical international economic importance, is not safe from Iran or its proxies. Although far from Saudi Arabia’s main oilfields and export terminals, the attacks nonetheless caused a brief rise in oil prices—indicative of the wider international implications of either Yemen’s civil war or Iran’s deteriorating relations with the US and its regional allies engulfing the Saudi oil sector.

The unsophisticated nature of some of the Houthi attacks also raises questions for the Saudi government about the level of security in place at such critical infrastructure sites, such as the port of the kingdom’s commercial capital, Jeddah. It also indicates a growing threat that the Yemen conflict could spill over into maritime insecurity in the Red Sea.



Barring a general ceasefire agreement between the Houthi movement and Saudi Arabia, which is unlikely in the six-month outlook, the Houthis are likely to continue attacks against targets in Yemeni and Saudi territory at varying frequencies. This will continue to have an impact on the global oil price and Saudi’s own oil revenues.

The Saudi oil industry accounts for 87 percent of budget revenues, 42 percent of GDP, and 90 percent of export earnings – this puts into perspective how sensitive Saudi Arabia is to disruptions in oil flows. Saudi Arabia can compensate for disruption inflows as it holds significant oil reserves and maintains spare capacity in pipelines and stabilisation plants. But a large number of low-impact attacks would cause significant damage over the medium to long-term as cost of repairs and defences accumulate. It would also challenge Saudi Arabia’s credibility as a reliable oil supplier.

Considering the Houthis’ intent to target commercially relevant assets in Saudi territory, the increasing sophistication of their UAVs, and Saudi Arabia’s inability to intercept all Houthi UAVs entering their airspace, targets are likely to face structural damage, potential loss of life, and lead to the suspension of air and energy operations. Assets in the south of Saudi Arabia are at highest risk, particularly Jizan, Abha, and Najran, and further north towards hydrocarbon facilities around Jeddah.

The Houthis will also continue to be able to shift and expand their target set according to their strategic priorities, as they have done in the past. Given the fact that the current 1,500-km range of Houthi UAVs encompasses most of Saudi territory, a large set of military and commercial assets will be potential targets for the movement.

On the maritime front, the Houthi insurgent tactics not only damage enemy warships, but more importantly have an economic impact through their threats to attack trade and oil shipments passing through the 29-kilometre-wide Bab Al Mandeb Strait and further north in the Red Sea. The Houthis have access to weaponised UAVs, WBIEDs, and sea mines to engage both military and commercial ships off the Yemeni coast, with military and commercially flagged vessels from countries participating in the Saudi-led coalition at highest risk. The Houthis are unlikely to risk escalating their attacks to include indiscriminate and recurring attacks targeting international commercial shipping, which would almost certainly invite a concerted military effort against them.

There is an increasing risk, however, of one-off demonstrative attacks and accidental targeting due to misidentification of commercial vessels. Such risk is likely to be most prominent near Saudi ports. Meanwhile, transiting commercial vessels are at high risk of attack off the coast of Hodeidah, although this risk is somewhat mitigated by coalition naval escorts.

There is also a growing risk of the Houthis attempting to deploy sea mines beyond contested coastlines near Midi, and potentially off the waters of the Zubair archipelago and the Hanish islands, but outright closure of the strait, even temporarily, is likely to remain beyond Houthi capabilities. Coalition interception of Houthi-manned skiffs in the Gulf of Aden would be a key indicator of attempts to expand the geographical range of attacks to the Arabian Sea.

A rise in mine usage by the Houthis will increase maritime risks, driving up insurance premiums and therefore shipping costs. Every ship needs various forms of insurance, including annual war-risk cover, as well as an additional “breach” premium when entering high-risk areas. These separate premiums are calculated according to the value of the ship, or hull, for a seven-day period. Breach rates have risen to around 0.015 percent of insurance costs from about 0.012 percent in late December 2020, equating to tens of thousands of dollars for a seven-day voyage, according to market estimates.