Yemen escalation and implications for Iran

The US has begun a campaign against Ansar Allah. The echoes of that will be felt in Iran.

Commercial Summary: Disruption in the Red Sea is likely to increase significantly, with all non-Chinese ships headed to Europe likely to be targeted. American success in Yemen paves the way for an attack against Iran. Incidentally, China is hedged against such an attack. A weaker Iran would benefit Pakistan and Turkey, while Iran itself is a forced ally of China. The biggest geopolitical and commercial loser is Europe.

Incident

The US announced a new campaign against Ansar Allah (the Houthi) in Yemen. For their part, the group claimed to have targeted the USS Harry Truman carrier group navy, with the US saying all projectiles were shot down.

A question of intelligence

We have said in the past that Ansar Allah has been under American backed bombardment since 2004/2005. This intensified significantly with the Saudi intervention in Yemen in 2015. The Saudis succeeded in preventing Ansar Allah from taking Aden, but failed completely in the mountainous terrain of northern Yemen, Ansar Allah’s stronghold. The group only grew stronger there, as it consolidated its control of the state apparatus and built up its arsenal despite constant air attacks.

Ansar Allah leader Abdul Malik al-Houthi

Now, the key question we have is one of intelligence. If the Americans penetrated Ansar Allah in the same way that Israel penetrated Hezbollah, then the odds are fully with the US. We note that Starlink began operating in Yemen in September 2024, suggesting that it was used for intelligence collection for six months, before American military operations began. Given the fog of war stemming from unknown intelligence capabilities, we are less confident in our predictions.

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