Iraqi and Yemeni threats to Saudi Arabia

Rising security risks to Saudi Arabia’s critical economic assets, but repeated strikes still unlikely.

Commercial Summary: Closer coordination between the Ansar Allah (Houthi) Movement and Iraqi pro-Iran militias, including a new attack on the US base in Ain Al Assad in Iraq and joint threats against Saudi Arabia, is intended to force the US and Saudi to halt efforts to restrict the ability of Ansar Allah to access the banking sector, not to restart the Saudi – Yemeni war. Symbolic, demonstrative attacks against critical energy, port, finance, and aviation targets in Saudi Arabia are more likely than a renewal of conflict. Should attacks against Saudi Arabia resume, they would indicate greater risks to Kuwait, Jordan, Bahrain and the UAE, especially if the Saudis retaliate in kind and the ceasefire in Yemen breaks down.

Analysis

Over the past 10 days, Ansar Allah (Houthi) Movement spokespersons, including the group’s leader, Abdul Malik Badreddine al-Houthi, have issued repeated statements threatening Saudi Arabia. The threats included banks, airports, ports, and other infrastructure, specifying Riyadh as the target. Iraqi militias have chimed in

The threats are somewhat of a surprise. Saudi Arabia had rejected US requests to use bases on its territories to strike Ansar Allah. The Saudis have also more or less abandoned some of their Yemeni allies that are opposed to Ansar Allah, or at least cut military support enough to prevent them from going on the offensive against the group. The Saudis even agreed to pay government workers’ salaries for a year. More importantly, an Iranian delegation is set to visit Saudi Arabia, and the Saudi Crown Prince called the new Iranian president to congratulate him on his election. Saudi Arabia and Iran reconciled under Chinese auspices, and neither side is keen to resume conflict.  

Ansar Allah’s reasoning

Ansar Allah’s grievances are that Saudi Arabia is backing factions in Yemen opposed to them, and that the Saudis are facilitating the blockade on Ansar Allah controlled ports and airports. The current trigger, however, is that the UN-recognised Yemeni government in Aden is cutting access to banks controlled by the capital, San’a, which is under Houthi control, which also severs their access to SWIFT. Ansar Allah blame Saudi Arabia for this. The UN objected to that move, as it may lead to a renewal of the civil war and a breakdown of the ongoing ceasefire.

Ansar Allah’s grievances also include alleged Saudi support to Israel, in that it is reportedly permitting the transport of cargo by land from Gulf states to Israel via Jordan and Saudi Arabia. 

Ansar Allah are likely thinking beyond the current Israel – Gaza war. They want to justify an escalation against Saudi Arabia, using the pretext of alleged Saudi support to Israel, to force the Saudis to remove all restrictions on ports and airports they control, as well as financial institutions. Ansar Allah calculate, correctly, that the Saudis do not want to resume the war. Pressuring Saudi Arabia now permits them to push the Saudis out of the war completely. That, in turn, would facilitate a total victory for Ansar Allah in the ongoing Yemeni civil war.

Iraqi escalation

Concurrent with renewed Houthi threats, Iraqi militias are also issuing new threats against Saudi Arabia. Kataib Hezbollah and Harakat al-Nujaba, two movements closely aligned with Iran, have warned that they would attack Saudi Arabia in support of Ansar Allah and of the Palestinians – they repeated Ansar Allah’s accusations that the Saudis were helping Israel cope with Ansar Allah’s maritime blockade.

Cooperation between Ansar Allah and the Iraqi militias has never been greater, with the two sides working together on attacks on Israeli ports and shipping.

Moreover, there was at least one attack on the US part of the Ain Al Assad Airbase in Iraq, using two drones. This suggests that the suspension of operations against US forces, in effect since February 2024, is now coming to an end.

Saudi Arabia’s options

Saudi Arabia is facing pressure from two directions. Ansar Allah and Iraqi Popular Mobilisation Units militias are threatening to attack it. The US is pressuring it to undermine the Houthi, by targeting the group directly, or targeting their economy, or restricting the group’s ability to trade. Which may have contributed to the decision by the UN-recognised Aden government to cut off Ansar Allah’s access to banks.   

It is unclear what Saudi Arabia can do. Its eight-year campaign in Yemen succeeded in preventing Ansar Allah from consolidating over all of Yemen but failed in its objective of restoring the UN-recognised government to power in the capital, San’a, and its aim of defeating and containing the Houthi - the Houthis are now more powerful than ever. Saudi Arabia does not want the conflict to resume, as that would lead to a loss of investor confidence at a time when it is striving to boost foreign investments. But Saudi Arabia has to be somewhat supportive of the US. It is stuck.

Iran’s position

The Islamic Revolution Guards Corps had in the past undermined Iranian officials’ attempts to compromise with the US by taking escalatory steps. This was especially true during the tenure of presidents seen as reformists or centrists. By contrast, when the late Iranian President Ibrahim Rai’si attempted to reconcile with neighbouring states, the IRGC tacitly supported his agenda by refraining from any new escalation.

Iran has just elected a reformist president again, Masoud Pezeshkian. He had served in the IRGC and is still close to it. It is unclear, at this stage, if the IRGC will return to its previous tactics. This is the main source of risk, as Ansar Allah and the Iraqi militias cannot launch attacks on Saudi Arabia without Iranian support and approval. If the IRGC wants to pressure Pezeshkian, it would authorise Iraqi and Yemeni factions to resume and intensify their attacks. If not, then this will either remain at the rhetorical level, or any attacks will be one-offs, rather than the start of a new campaign.

Commercial Impact

The coordination between Ansar Allah and Iraqi militias reinforces our view, stated at the outset of the Israel – Gaza war, that the conflict is intended to force the US out of the region. The attack in Iraq on Ain al-Assad airbase is intended to remind the US that its options in any one theatre, such as Yemen or Lebanon, are limited, as it would have to fight in multiple theatres in a manner that overstretches US forces and bleeds the US economy. That in turn is intended to pressure the US into pressuring its allies in Yemen and Saudi Arabia to end the banking blockade on San’a and the Ansar Allah movement. By contrast, if the Iraqi militias declare an end to the freezing of attacks, this would indicate that they are seeking to expel the US sooner rather than later, in line with their statements.