Spot Report: Houthi Targets Yemen’s Dhabah Oil Terminal in Ash Shihr by Robert Uniacke

Alarm bells were sent ringing for a renewed escalation in the Yemeni conflict on Friday when the governor of Yemen’s eastern Hadramawt governorate Mabkhout bin Madi announced that Houthi UAVs had targeted the Dhabah Oil Terminal in the Port of Ash Shihr. At the time, the Marshall Islands-flagged oil tanker NISSOS KEA was in port, with locals reporting explosions as air defenses engaged the UAVs. However, shortly after the incident, NISSOS KEA was reported to have safely left Dhabah.

Nonetheless, the attack marks possibly the most significant escalation in the Yemeni conflict since the six month truce expired on 02 October 2022. As the truce wound down, top Houthi officials overtly threatened to “deal with” foreign companies perceived to be “looting Yemen’s sovereign wealth,” warning foreign entities operating in areas the Houthis see as “occupied” by the Saudi-led coalition not to “extract even a barrel of oil for export.” In the Dhabah attack, the Houthis sent a message that they are willing and able to follow through on these threats; indeed, when Yahya Sare’e, the Houthi military spokesperson, officially claimed the group’s responsibility for the operation, he described it as a “warning shot.”

But in a broader sense, the attack likely also intended to undermine the internationally recognized government (IRG)’s economic outlook. Amid high global oil prices, rising hydrocarbon revenues have propped up the government’s ailing fiscal position, all as energy crises prompt increasing international interest in revitalizing the Yemeni energy sector. As foreign energy companies demand political stability and security to restart oil and Liquified Natural Gas (LNG) operation in Yemen, the attack is a clear blow to IRG efforts to make any case for investment.

The incident may more immediately impact the trajectory of the conflict. Although, since the end of the truce, coalition air strikes have remained paused and frontline forces have refrained from major offensives (despite a notable uptick in fighting), the Houthis have clearly escalated in ordering a strike within IRG territory against international commercial and maritime interests. Much will depend on how the IRG and coalition respond.