DID Press: Recent developments in Yemen and mounting pressure on energy transit routes have heightened concerns over the economic and geopolitical consequences of the continuing war with Iran. In the latest development, Yemen’s Ansarullah has attacked positions held by Aden government forces, taking control of parts of the Red Sea coast and strategic areas around the Bab al-Mandeb Strait. Reports also indicate that Ansarullah has seized the strategic island of Perim in the strait.
The rapid collapse of Aden government forces has given Ansarullah access to a significant amount of military equipment supplied by Saudi Arabia. The development has been compared with the collapse of Iraqi forces in Mosul in the face of ISIS in 2014 and the rapid collapse of Bashar al-Assad’s forces in December 2024.
At the same time, Ansarullah missile attacks on Saudi Arabia’s East-West oil pipeline, one of the kingdom’s key routes for transporting oil to Red Sea terminals, have disrupted the route at least temporarily. Saudi oil exports had already begun to decline following Ansarullah threats against shipping in the Red Sea, putting additional pressure on global energy markets.
A Wall Street Journal report on Sept. 11 also indicates that advisers to U.S. President Donald Trump have warned about the possibility that Washington’s current strategy — including a naval blockade and intense economic pressure — could fail to force Iran to surrender before the end of Trump’s presidency. The Journal has separately reported that senior U.S. officials have discussed the possibility that the war could continue through the remainder of Trump’s term.
Despite these concerns, the Trump administration appears to have yet to present a clear and sustainable strategy for returning to negotiations. Trump continues to speak of Iran’s “surrender” as the objective of U.S. pressure, and there is no clear indication that Washington is shifting toward negotiations.
A continuation of the current situation could have serious consequences for energy markets. Strategic and commercial oil inventories have declined in recent months, while the petroleum-products market is also facing increasing pressure. At the same time, global refining capacity has been affected by disruptions at export-oriented refineries in the Gulf and Ukrainian drone attacks on Russian refining facilities.
Diesel shortages and rising prices in the United States have increased the risk of further inflation and added pressure on Federal Reserve monetary policy. At the same time, tanker traffic through the Strait of Hormuz is facing serious restrictions. Although some tankers belonging to national oil companies in the Gulf Arab states continue to use the route, insurance restrictions and security risks have prevented a significant increase in private tanker traffic.
Developments in Yemen have made the situation more complicated. Continued Ansarullah attacks on shipping in the Red Sea and the possibility of further attacks on Saudi Arabia’s oil pipeline increase the risk of additional disruptions to global oil supplies. Under such circumstances, a prolonged war could keep oil prices elevated for an extended period and even revive the prospect of oil reaching $150 a barrel.
Regional countries are also suffering from the consequences of the crisis. Iraq is facing budgetary pressures, Qatar is dealing with lower energy revenues, while Egypt is confronting higher oil prices and declining revenues from the Suez Canal. Continuing a maximum-pressure policy without offering a clear political path could also put Washington’s relations with its regional allies under further strain.
The Trump administration therefore faces a difficult choice: continue the war and accept its growing economic and geopolitical costs, or change course and return to negotiations. The central question now is whether anyone within the U.S. president’s inner circle will be willing to tell him this reality plainly.