Between the Houthis and Hormuz: Four Scenarios — and What Will Be the Impact on Israel?

The Houthi takeover of Yemen's western coast and the Bab el-Mandeb Strait, along with the attack on the Saudi East-West oil pipeline, creates a new dependency and a crisis in global energy markets. Saudi Arabia faces three vulnerability points simultaneously, its oil output has plummeted, and the crisis threatens to become inflationary. Israel, however, enjoys a relative advantage due to electricity generation from local natural gas, but is exposed to rising fuel prices.

The Houthi takeover of Yemen's western coast, including the port city of Mokha and several islands in the Bab el-Mandeb Strait, is changing the energy balance of power in the region. Within a short time, the Houthis completed their takeover of the strait area, bringing their missile and drone arrays closer to one of the world's most sensitive trade routes. Simultaneously, the Saudi East-West oil pipeline was attacked at several points, likely from Iraqi territory, leading to its shutdown. Thus, Saudi Arabia now faces three vulnerability points at once: Hormuz is restricted, the land pipeline was attacked, and Bab el-Mandeb is under Houthi threat. Saudi oil output dropped in August to 5.97 million barrels per day, compared to 8.24 million in July. The crisis threatens to become inflationary, with diesel prices in the US crossing a level equivalent to $200 per barrel. For Israel, the impact is complex: the port of Eilat is almost shut down, but the economy can shift activity to Haifa and Ashdod. An important advantage is that about 73% of electricity in Israel is generated from local natural gas, so a spike in oil prices does not directly translate to electricity. However, transportation and industry are exposed to rising fuel prices.