Houthi–Saudi Arabian conflict

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18-Jan-2023: Houthi rebels revive back-channel talks

Yemen's longest ever pause in fighting. Saudi Arabia and Iran-backed Houthi rebels revive back-channel talks.

Roots of the Houthi Movement

  • "Believing Youth", a Zaydi revivalist group founded by Hussein al-Houthi and his father, Badr al-Din al-Houthi
  • Movement turned political and started attacking the regime of Ali Abdullah Saleh
  • Saleh's support for the US’ war on terror

Rapid rise of the Houthis in Yemen

  • Alarm bells in Saudi Arabia
  • Houthis seen as Iranian proxies

Saudi Military Campaign in Yemen started in March 2015. The ongoing conflict in Yemen continues to be a source of tension between Saudi Arabia and Iran.

16-Sep-2019: Attack on Saudi Arabia’s oil facility

Houthi attack on Abqaiq plant and Khurais oil field in Saudi Arabia led to the disruption of 6 million barrels per day in crude oil production. Saudi Arabia supplies 10% of global oil supply.

Impact on Oil Prices

  • Already expected decline of 0.8 mbd in H2 of current year
  • Oil prices expected to trend around $75 per barrel
  • Prices will reflect immediate disruption and potential military response

Impact on India

  • Imports 80% of oil from Saudi Arabia
  • India's second largest supplier of crude oil (17 per cent of the country’s imports) after Iraq.
  • India would have to look for alternatives. This may not be easy since the global supply has been fairly volatile because of disruptions in some of the other big suppliers such as Venezuela, Libya and Nigeria.
  • Supply constraints and rising oil prices
  • Increase in import bill and depreciation of rupee
  • Worsens government's fiscal balance
  • Dip in consumption demand and lower economic activity

Houthi-Saudi Arabian Conflict

  • Ongoing armed conflict
  • Taking place in Arabian Peninsula including the southern Saudi regions of Asir, Jizan, and Najran, and northern Yemeni governorates of Saada, Al Jawf, and Hajjah.
  • Began with Saudi Arabian-led intervention in Yemen in 2015

Significant impact on oil prices and global economy. There is a dire need of resolving Houthi-Saudi Arabian conflict.