Houthis Capture Perim Island, Tightening Grip on Bab al‑Mandeb Shipping Lane
Yemen’s Houthi forces have seized the strategic island of Perim and the coastal town of Dhubab, threatening the Bab al‑Mandeb strait – a key oil transit route – and raising geopolitical risk for global oil markets.
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Sector Effect
Negative · Do not buy
Oil & Gas sector faces higher risk from disrupted Red Sea routes – avoid buying related stocks.
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Desk call: Do not buy · Negatively affected
- Oil & GasNegatively affected
- MarketsNegatively affected
- EconomyNegatively affected
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Sectors: Oil & Gas, Markets, Economy — Negative · Do not buy. PSX tickers: HUBC, KEL, KAPCO, PIAHCLA, PIAA, PIA. Oil & Gas sector faces higher risk from disrupted Red Sea routes – avoid buying related stocks.
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Open on Business Recorder## Houthi Advance in the Red Sea
Yemen’s Houthi militia announced on Friday that they have taken control of Perim Island, located at the mouth of the Bab al‑Mandeb Strait, a vital chokepoint for global oil shipments. The claim was corroborated by four Yemeni government sources who also reported the capture of the mainland Red Sea town of Dhubab, which lies opposite the island.
## Strategic Implications for Oil Flows
The Bab al‑Mandeb Strait handles a significant share of the world’s oil and liquefied natural gas (LNG) trade. If the Houthis consolidate control, Iran – the group’s backer – could gain a strategic advantage over the United States by threatening a second major oil corridor, complementing the already contested Strait of Hormuz. Saudi Arabia, the world’s largest oil exporter, has increasingly relied on the Red Sea route since the Hormuz corridor was disrupted by recent US‑Israel strikes on Iran.
## Regional Tensions and Market Reaction
The capture comes amid heightened attacks on Gulf shipping by Iran and the United States, and a stalled diplomatic effort to secure safe commercial passage through Hormuz. Iranian officials confirmed a meeting in Oman with representatives from Iraq and Gulf Arab states to discuss shipping security.
## Potential Impact on Saudi Oil Infrastructure
Satellite imagery verified by Reuters showed smoke near Saudi Arabia’s East‑West crude pipeline, a critical artery for diverting exports away from Hormuz. While Saudi authorities have not confirmed any incident, the International Energy Agency reported that Saudi crude output fell to 6 million barrels per day in August – the lowest in over three decades – partly due to Houthi‑linked attacks on vessels transiting Bab al‑Mandeb.
## Market Outlook
Oil prices dipped briefly on Friday but remained on track to close the week above $100 per barrel, the first time since mid‑May. Ship‑tracking data indicated a sharp decline in traffic through the Strait of Hormuz, underscoring the growing uncertainty around global oil supply routes.
## Houthi Statements
Houthi military spokesperson Yahya Saree warned that navigation remains safe for all ships except Saudi vessels, which are subject to a previously announced ban. He pledged to maintain the blockade until Saudi actions against Yemen cease.
## Yemeni Government Response
Yemeni forces said they will launch operations to retake the captured areas, deploying weapons and aircraft to secure strategic coastal routes, including the road to the city of Mocha, which the Houthis seized earlier this week.