Houthi rebels seized a key Red Sea port, escalating the conflict in Saudi Arabia; Iran was reported to have resumed ballistic missile production; crude oil prices rose more than 7% intraday.

The situation in the Middle East is showing signs of escalation again, and the risks are spilling over from the Strait of Hormuz to key shipping lanes in the Red Sea.

On Thursday, September 10th local time, according to CCTV News, the Houthi rebels in Yemen claimed that the Saudi Air Force launched 64 airstrikes against the provinces of Taiz, Hodeidah, Marib, and Jawf in the past 24 hours. Meanwhile, CCTV cited a report from the Wall Street Journal stating that "Iran has resumed ballistic missile production in underground facilities using stockpiled spare parts."

According to Xinhua News Agency, Yemeni government military officers revealed on Thursday that the Houthi rebels captured Muha, a strategic Red Sea port city in Taiz province in southwestern Yemen. Bloomberg reported that the Houthis have recently been advancing towards the southern end of the Red Sea, near the strategic Bab el-Mandeb Strait. Controlling Muha would further expand their control over the area surrounding this vital shipping lane.

However, according to Xinhua News Agency, the Houthi rebels in Yemen said on Thursday that international ships are "not threatened" and remain safe in the Red Sea and the Bab el-Mandeb Strait.

The market reacted swiftly. Following news of Iranian-made ballistic missiles, international crude oil futures surged by more than 7% during the midday trading session on Thursday. Brent crude oil rose to $108.42 per barrel, its highest level since May 21; US WTI crude oil rose to $103.06 per barrel, a daily increase of about 7.3%, breaking through $100 per barrel for the first time since late May.

Houthi rebels captured Muha, bringing them closer to the Bab el-Mandeb Strait.

According to Xinhua News Agency, Muha is not only a port on the Red Sea coast, but also a strategic location in Taiz province in southwestern Yemen. Its geographical location makes this capture further highlight the Houthi armed forces' intention to advance towards the Bab el-Mandeb Strait.

An unnamed local government military officer told Xinhua that after several hours of fierce fighting, government forces were forced to retreat south to the Zubab area, located between the Muha and Bab el-Mandeb Straits, and Houthi rebels entered Muha.

Bloomberg reports that the Houthi rebels have made progress in their operation to capture Muha. Shipping security consultant Bjorn Beirens stated that capturing Muha would give the Houthis a new stronghold, allowing them to push further south and gain "almost complete control" of the Bab el-Mandeb Strait. The loss of Muha "will undoubtedly have an impact on maritime security in the region."

Andrew Farrand, director of Middle East and North Africa at Horizon Engage, a global geopolitical risk consulting and intelligence firm, said that the Houthi rebels' continued southward advance along the coastline could reach "strategic locations" in the narrowest part of the Bab el-Mandeb Strait, which would be a "very significant setback" for Saudi Arabia's military operations in Yemen.

The Bab el-Mandeb Strait connects the Red Sea and the Gulf of Aden and is one of the world's most important maritime routes. The Houthi rebels had previously impacted international shipping by controlling areas along the Red Sea coast, such as Hodeidah. The capture of Muha means their control over the western Red Sea coast has further expanded.

Saudi Arabia launched intensive airstrikes, and the Houthi rebels claimed responsibility for retaliating.

As Muha fell, the military conflict between Saudi Arabia and the Houthi rebels continued to escalate.

CCTV News, citing a statement from the Houthi rebels, reported that in the past 24 hours, the Saudi Air Force launched 64 airstrikes on four provinces in Yemen, deploying F-15 and Typhoon fighter jets, which took off from King Fahd Air Base in Taif and King Khalid Air Base in Khamis Mushait.

The Houthi rebels also claimed that they intercepted a combat formation in Taiz province and used surface-to-air missiles to strike it, forcing it to withdraw. Saudi Arabia has not yet responded to this.

Bloomberg reports that the Houthi rebels have recently continued to launch missile and drone attacks on towns in southwestern Saudi Arabia, damaging energy facilities. Saudi Arabia claims that the recent Houthi attacks have injured 73 people, including women and children.

The Houthi rebels claimed that their actions were a response to the continued attacks by Saudi-backed forces in Yemen and the Saudi blockade of some ports and airports in areas under their control.

According to Xinhua News Agency, Houthi spokesman Mohammed Abdulsalam said in a statement on social media on Thursday that navigation and international trade in the Red Sea and the Bab el-Mandeb Strait remain "safe and normal," and that the group's operations "do not pose a threat to international shipping." He stated that the Houthi military operations currently underway have specific objectives and are "defensive."

What does the resumption of missile production in Iran signify?

CCTV News mentioned that, according to a Wall Street Journal report, although Iran is currently assembling new missiles on a "more limited scale" using existing components, this still undermines the "major gains" that the United States and Israel have touted in this war.

The Wall Street Journal, citing informed U.S. and Middle Eastern officials, reported that Iran has resumed ballistic missile production in an underground facility using stockpiled spare parts.

The report indicates that Iran is currently assembling new ballistic missiles primarily using previously stored components, at a scale lower than before the war, but related activities have resumed. Intelligence held by US and regional officials suggests that Iran is using underground facilities for assembly and is attempting to maintain its missile capabilities by resuming production.

This development means that despite the previous attacks by the United States and Israel on Iranian military facilities, which claimed to have significantly weakened its ballistic missile capabilities, Iran still possesses a certain degree of production and recovery capacity. Because some production facilities are located underground and projects are highly dispersed, Iranian missile production has not been completely halted by the previous attacks.

Risks from two key shipping routes overlap, causing risk premiums in the oil market to rise.

Crude oil prices rose more than 7% intraday, reflecting the market's reassessment of the potential impact of the Middle East conflict on global energy transportation.

Previously, the core risks in the market were mainly concentrated in the Strait of Hormuz. However, with the Houthi rebels capturing Muha and advancing towards the Bab el-Mandeb Strait, the Red Sea, an important shipping route connecting Eurasia, has once again become the focus of geopolitical risks.

For Saudi Arabia in particular, if the Houthi rebels advance further toward the Bab el-Mandeb Strait and continue to attack Saudi facilities along the Red Sea coast, Saudi Arabia's ability to reduce the risk in the Strait of Hormuz through alternative routes such as the Red Sea may be hampered.

With the risks at the Strait of Hormuz and the Bab el-Mandeb Strait, two major energy transport chokepoints, rising simultaneously, market concerns about supply disruptions have increased further, leading to a significant rise in the geopolitical risk premium in crude oil prices.

Risk Warning and DisclaimerInvesting involves risk; please exercise caution. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Any investment decisions made based on this information are at your own risk.