Yemen – watch this space

The airstrike intervention in Yemen by Saudi Arabia and its allies is an indication of weakness, not strength. It is another failure of regional foreign policy for Riyadh.

The most the intervention can do is a put a halt to the Houthi advance on Aden. If Aden fell, Yemen would be riven in two along a north-south axis rather than the east-west axis that divided the country until the nominal unification of 1990.

The Saudis have fought border wars with the Houthis over the years and supported counter insurgency operations of the Sana’a government. They know that the costs of boots on the ground would be high and will shy away from it. The 1962-70 civil war in the north demonstrated that. The British learnt the lesson in Aden in the mid 1960s.

The north-south conflicts of 1979 and 1994 and the further years of fragmentation and division since prove that there will be no peace in Yemen until the communities who live there agree on a political settlement, whether that be a Lebanon-style allocation of powers or a re-division of the country.

For the oil industry, Yemen’s importance as a producer is limited. The high hopes of the early 1990s have long faded and what exports there are face frequent disruption. January exports were around 150,000 b/d.

A Houthi-Saudi border conflict would doubtless worry the market but the Saudi oil fields are located far away. The pressing question is whether shipping in the Gulf of Aden and Red Sea will come under an increased threat. Some 4mn b/d of crude and around 100,000 t/d of LNG – roughly 900,000 b/d of oil equivalent — flows through Bab al-Mandeb.

The threat from Somali pirates in the Gulf of Aden has been all but eliminated by the presence of western navies. But there are other players. In 2000 al-Qaida struck the USS Cole in the port of Aden and it will be tempted to exploit any power vacuum along the coast. Then, faced with outside intervention, would elements within the Houthi tribes try to strengthen their hand with a threat to shipping to and from Saudi Red Sea ports and the refineries at Rabigh, Jizan, Yanbu, and Jeddah? That would indeed be an own goal for Riyadh.

If marine insurance cover is withdrawn or becomes punitively expensive, tankers will be diverted away from the Suez Canal and Sumed pipeline, increasing freight costs and journey times and raising the chances of pirate attacks down the east coast of Africa.

As of this afternoon, the shipping market remained sanguine. The London insurance market’s Joint War Committee has not made a move and no ships have been cancelled or diverted. Watch this space.

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