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Houthis announce Saudi naval blockade, threatening new front in US-Iran war - Finance news and analysis from Global Banking & Finance Review
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Houthis announce Saudi naval blockade, threatening new front in US-Iran war

Published by Global Banking & Finance Review

Posted on July 20, 2026

6 min read

· Last updated: July 20, 2026

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Houthis announce Saudi naval blockade, threatening new front in US-Iran war

By Nayera Abdallah, Eman Abouhassira and Timour Azhari

Escalation in the Gulf: Naval Blockade and Rising Tensions

DUBAI/RIYADH, July 20 (Reuters) - Yemen's Iran-aligned Houthis said on Monday they would impose a naval blockade on Saudi Arabia, opening a potential new front against the United States in its war with Iran and raising the threat to global energy supplies and trade beyond the Gulf.

Recent Deadly Attacks and U.S. Response

The escalation comes after one of the deadliest periods in the war for U.S. troops. The Pentagon on Monday identified two U.S. soldiers who were killed when Iran attacked an American base in Jordan on Friday, while they also said they had found unidentified remains that could be those of a third soldier reported as missing in action. Separately, a fourth service member was killed in northern Iraq during the "controlled detonation of unexploded ordnance from a downed Iranian one-way attack drone."

Saudi-Led Coalition and Maritime Security

After the Houthis announced their blockade, the Saudi-led coalition in Yemen said in a statement that it would respond to them with force, and also that it began implementing protection measures for its ships moving through the Bab el-Mandeb Strait,  a key export route for Saudi oil after the effective closure of the Strait of Hormuz.

Diplomatic Signals Amidst Escalation

The Houthis made their announcement despite signs that Tehran and Washington want to resume diplomacy to halt a worsening cycle of attacks that has all but wrecked a fragile interim agreement signed last month. Iran's Foreign Ministry said mediators had presented "proposals" to Tehran, signalling that diplomatic contacts remain active, but gave no details.

Impact on Oil Prices and Shipping

Oil prices rose briefly after the Houthi statement but later fell back as traders held out hope of a diplomatic breakthrough. The insurance cost of shipping goods through the Red Sea rose on the increased risks for merchant shipping.

Strategic Importance of Bab el-Mandeb Strait

Iran had been pressing the Houthis to close the Bab el-Mandeb gateway to the Red Sea if the U.S. continued to attack Iranian power infrastructure.

Potential Global Oil Supply Disruption

A full closure of the strait would reduce  global oil supply by 7% as it would leave most of Saudi oil  exports unable to leave the region. The disruption would add to the huge cut to oil flows from the war in the Gulf,  which has already reduced shipments by 10% of global supply.    

Houthis' Statement and Justification

In their statement, the Houthis' armed forces said they were declaring "a maritime embargo against the criminal Saudi enemy, based on the equation of 'an eye for an eye', effective immediately" in response to what they called "an unjust and oppressive siege" imposed on Yemen by the Saudis.

Diplomatic Push to Restore Ceasefire

Ceasefire Proposals and Mediation Efforts

A senior Iranian official told Reuters on Monday that Tehran had received a proposal from mediators for a 10-day ceasefire in efforts to salvage the interim deal, intended to pave the way to a lasting agreement to end the war that began on February 28 with U.S.-Israeli attacks on Iran.

Neither the ministry nor the official who spoke to Reuters gave any details on the putative ceasefire discussions.

Two Pakistani government sources said separately that Iranian Interior Minister Eskandar Momeni had asked Pakistan to resume its mediation role in the conflict. He later arrived in Islamabad for further talks.

Continued U.S. and Iranian Military Actions

The diplomatic push followed another night of U.S. strikes on Iranian cities and attacks by Iran's Revolutionary Guards on U.S. military assets across the region. U.S. Central Command said Monday afternoon U.S. time that it had begun another round of strikes on Iran. 

U.S. Political Response

President Donald Trump, under mounting political pressure at home over rising gasoline prices since the war began and Iran effectively closed the vital Strait of Hormuz, defended the latest strikes on Iran as honoring the deaths of American service members killed in recent Iranian attacks.  

"Every time Iran kills an American Soldier they will pay for that killing many times over! This directive has been passed on to Secretary of War, Pete Hegseth, Chairman of the Joint Chiefs of Staff, Daniel Caine, and every Leader in the Military," Trump wrote on Truth Social on Monday.

Regional Impact and Ongoing Conflicts

The war has killed thousands of people, mostly in Iran and Lebanon, part of which has been occupied by Israeli forces following attacks on Israel by Hezbollah fighters who said they were acting in solidarity with Tehran. 

Lebanese President Joseph Aoun is due to meet Trump at the White House on Tuesday to present a plan on how to disarm Iran-aligned Hezbollah and secure an Israeli withdrawal.

Israel also still has forces in Gaza following two years of war ignited by the Palestinian militant group Hamas' attack on southern Israeli communities on October 7, 2023. Hamas said on Monday it had named top negotiator Khalil Al-Hayya as its overall leader, a move that an analyst said could signal a tougher stance by the group towards calls for it to disarm. 

Iran Says Tankers Exploded

Incidents in the Strait and Surrounding Areas

The Islamic Revolutionary Guard Corps (IRGC) said two oil tankers had exploded after attempting to transit the strait via an "unsafe" route. On Sunday, the IRGC had said two ships were involved in an "accident" in the same area. It was unclear whether the two incidents were related.

Reuters could not immediately verify the incident. The IRGC statement gave no details about the vessels or any casualties.

Separately, a vessel was struck by an unknown projectile off Oman's coast, overlooking the Strait of Hormuz, the United Kingdom Maritime Trade Operations agency said.

Explosions and Missile Strikes in Iran and the Region

In Iran, explosions were reported in Tabriz, Chabahar, Konarak, Bandar Mahshahr and Bandar Imam Khomeini. One person was killed and several wounded southwest of Tabriz, according to state news agency IRNA.

The IRGC said it targeted U.S. aircraft at Jordan's Aqaba airport with ballistic missiles, as well as military assets at Kuwait's Al-Adiri camp and Ali Al Salem Air Base, and positions in Syria.

Sirens sounded in Bahra

References

Frequently Asked Questions

What triggered the latest US strikes against Iran?
Strikes resumed after both sides accused each other of violating a ceasefire agreement, with growing regional hostilities and American casualties.
How have energy markets responded to the conflict?
Oil prices jumped 3% on Monday, with Brent crude surpassing $90 a barrel amid fears of supply disruptions in the Strait of Hormuz.
How many US military personnel have been confirmed killed?
Since the war began, 17 US military personnel have been reported killed, with over 420 wounded.
Which areas were struck during the US attacks on Iran?
US missiles reportedly struck Tabriz, Chabahar, Konarak, Bandar Mahshahr, and Bandar Imam Khomeini in Iran.
Why is the Strait of Hormuz significant in this conflict?
The Strait of Hormuz is a vital shipping lane for global energy supplies, and conflict there threatens worldwide energy stability.

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