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In defiance of Houthi threats to bomb oil export ports in areas controlled by the internationally recognized government if oil extraction and exports resume, Yemeni Presidential Leadership Council Chairman Rashad al-Alimi announced efforts to restart oil exports beginning July 20, with revenues to be directed toward serving citizens across the country, including areas under Houthi control.
He explained that the proceeds would be used to meet the Yemeni state’s basic obligations, pay public-sector salaries, improve services, and bolster economic stability.
Following this announcement, the National Defense Council met and approved a package of measures to support what it called the “battle for liberation and the resumption of oil exports.”
After more than seven years of war in Yemen, oil has become one of its most prominent pressure cards. In this context, observers are asking how successful efforts to restart oil fields in areas under the Yemeni government’s control will be, what can be expected from the Houthis’ response, whether there is in fact an undeclared deal between the Houthis and their rivals, and how the Saudi and US roles in this file can be understood, especially since Al-Alimi’s decision came just hours after a statement by the Houthi group announcing the start of a ban on Saudi maritime navigation, on the pretext that the blockade it says is imposed has not been lifted.
The significance of the timing
After Yemen’s central bank was moved from Sanaa, which is under Houthi control, to the government-controlled city of Aden, Houthi leader Abdul Malik Badreddin al-Houthi demanded that the Yemeni government share oil revenues, but it did not respond. In November 2022, the Houthis struck Al-Dhabba port in Hadramout and Al-Nashima port in Shabwa, causing oil exports to stop completely, and government-held areas have continued to suffer severe economic crises up to the present.
The Yemeni government had relied on oil production and exports, with revenues accounting for about 7 percent of the state’s general budget, serving as a source of foreign currency reserves, helping finance imports of essential goods, and supporting the stability of the local currency. The government had tried to export oil, but it faced Houthi attacks that disrupted operations and prevented foreign companies working in the country from continuing their activities.
In comments to Noon Post, Yemeni political analyst Mohammed al-Huraibi said the timing of President Al-Alimi’s announcement came in response to a global need, especially with the ongoing US-Iran conflict. According to al-Huraibi, the Yemeni government did not move toward this step without studying the available options, expected scenarios, and preparing for all possibilities.
Al-Alimi’s decision was preceded by a series of measures, the first of which came on June 5, when crude oil shipments resumed from fields in Shabwa province to the President power station in the capital, Aden. It was something of a test of the Houthis’ reaction, but the group ignored the move.
On June 28, President Al-Alimi met a delegation from the US-based Hunt Oil Company, and the meeting addressed partnership opportunities between the Yemeni government and Hunt in oil and gas exploration, production, and export, as well as prospects for resuming the company’s investment activities. At the time, Al-Alimi pledged to secure vital facilities and create suitable conditions for restarting production activities.
At that time, Houthi-affiliated media were reporting the arrival of US troops and military equipment at the strategic Nahb camp in Ghayl Bin Yamin district of Hadramout province. The Houthis viewed that as an indication of a US military buildup deep inside Hadramout’s oil-producing areas.
These developments in Hadramout, Yemen’s largest province by area and its biggest oil producer, coincided with negotiations taking place in Muscat between the Houthis and the Yemeni government. At the time, drones were flying over Hadramout’s skies and were believed, according to media sources, to belong to the Houthi group.
In comments to Noon Post, a senior official at Yemen’s Oil Ministry — who requested anonymity because he is not authorized to speak to the media — confirmed that the Houthis had succeeded in completely halting oil and gas exports from all exporting areas. He explained that workers in the oil production sectors had refused government directives to resume their duties for fear of being targeted by Houthi drones. This was the dilemma that prompted Hadramout Gov.
Salem al-Khanbashi to stress in a press interview that the resumption of oil exports in government-controlled areas depends on the Houthi group’s approval.
The Yemeni government estimates the losses it has suffered as a result of the halt in oil production and exports from areas under its control at more than $6 billion.
The limits of the Saudi role
The Houthi group accuses Saudi Arabia of preventing Yemenis from investing in their oil wealth and depriving them of benefiting from it over past decades. In various remarks, Houthi leader Abdul Malik Badreddin al-Houthi has said the Saudi regime prevented oil extraction in the provinces of Al-Jawf, Marib, and Al-Mahra, claiming that Saudi Arabia forced foreign companies to leave Hadramout and Al-Mahra and refrain from exploring for oil there.
A few days before Al-Alimi announced the resumption of oil exports, the Houthi leader had pointed out that the Yemeni people are being deprived of the financial returns from 90 million barrels annually, even though they are rightfully theirs.
But political analyst Mohammed al-Huraibi sees it differently. He told Noon Post that Saudi Arabia has played a major role, in coordination with the United States, in restarting oil exports, and that without Saudi support the Yemeni government would not have been able to complete maintenance at the facilities and prepare the export ports.
He noted that President Al-Alimi’s announcement of resumed oil exports after the Houthis declared a ban on Saudi maritime navigation confirms that this challenge did not come from the Yemeni government except in full coordination with Riyadh.
The return of fighting
Journalist Mohammed Shabita, who specializes in economic affairs, believes that any practical step to resume oil exports from areas under the Yemeni government’s control would not only mean restoring a vital economic resource, but would also represent a test of the balance of power on the ground and each side’s ability to impose its will.
Shabita believes many observers expect that the next battle, if it breaks out, may not begin with a political statement or a formal declaration of war, but through the gateway of oil. If the government moves to implement the export decision and the Houthis try to stop it by force, the chances of escalation will expand significantly and could lead to a long-anticipated open confrontation following the recent rise in regional tensions.
Analysts in separate comments to Noon Post indicate that there were secret, undeclared agreements during the peace talks between the Houthis and Saudi Arabia allowing the Houthis to let the Yemeni government resume oil exports in exchange for the Houthis receiving certain percentages of the total shares distributed from Yemen’s oil fields. But this remains speculative unless confirmed by one of the parties.
In this regard, Yemeni journalist Aseel Saria confirmed that the Houthis will never allow oil exports unless there is an undeclared agreement to that effect and for part of the revenues to be paid to them.
For his part, political analyst Mohammed al-Huraibi said at the conclusion of his remarks to Noon Post that it is not unlikely the Houthis will try again to target export ports, and there are strong expectations that they will do so. But the Yemeni government, according to assurances from political leaders, has a matrix of measures to deal with all possibilities, especially if this announcement is understood in its natural context as a challenge to the Houthis.
That means the government is waiting for them to launch any attack in order to initiate a large-scale military battle, signs of which have begun to emerge in recent months through ongoing preparations and heightened combat readiness in units of the Yemeni armed forces and anti-Houthi military formations.
