Houthis are making serious gains, but denting the global economy just as deeply too — Phar Kim Beng

On September 15, the Houthi rebels in Yemen have demonstrated their ability to inflict significant economic costs on the international community. A drone attack on Saudi Arabia's critical East-West oil pipeline could cause the loss of as much as 4 percent of global oil supply if repairs take longer than expected. The 1,200-kilometre pipeline, which bypasses the troubled Strait of Hormuz, is carrying roughly four million barrels a day and currently holds only five to seven days of export stock at Yanbu.

The Houthi advances along Yemen's Red Sea coast, along with their seizure of strategically positioned islands, are increasing pressure around the Bab al-Mandab, a crucial maritime passage. The economic repercussions of this conflict are far-reaching, with oil markets already responding to the escalation. Brent crude moved above US$108, and concerns over energy-driven inflation are once again spreading through financial markets.

The vulnerability of the global economy is highlighted by the fact that even countries rich in oil resources may not be able to insulate themselves completely from a sustained global price shock. The Houthi gains in Yemen can lead to a dangerous strategic confrontation, as outside powers might become more inclined to intervene if the disruption of Saudi energy infrastructure and maritime passage continues.