Saudi Arabia Faces Difficult Choices as Threats from Iran and Its Allies Grow

Saudi Arabia is facing an increasingly difficult security situation as Iran and groups aligned with Tehran step up pressure across the region. Recent advances by Houthi fighters have raised concerns over the security of a key Red Sea shipping corridor, while drone attacks blamed on Iran-backed militias in Iraq have disrupted a major Saudi oil pipeline. At the same time, continued tensions around the Strait of Hormuz are creating additional risks for the kingdom and global energy markets.

The developments have put Riyadh in a particularly challenging position. Saudi Arabia's most important security partner, the United States, has shown growing caution about becoming more deeply involved in another Middle Eastern conflict. US President Donald Trump has indicated reluctance to expand America's military commitments, especially as the wider war has become politically controversial ahead of congressional elections.

Michael Ratney, a former US ambassador to Saudi Arabia, described the situation as extremely frustrating for the kingdom. Saudi leaders had spent years trying to avoid another major confrontation in Yemen and were concerned about the consequences of a wider regional war. Instead, several of the scenarios Riyadh had feared have now begun to materialise. Saudi authorities have not publicly commented on every aspect of the latest developments. However, a Saudi official said the kingdom would defend itself and coordinate with international partners, including Washington, to protect freedom of navigation through the Red Sea.

The growing instability is also threatening Saudi Crown Prince Mohammed bin Salman's broader vision for the country. For years, the de facto Saudi ruler has pursued sweeping economic and social reforms designed to diversify the kingdom's economy and transform it into a major international business and investment centre. A more stable and integrated Middle East has been an important part of that strategy. Those ambitions have faced repeated setbacks since the Hamas attack on Israel in October 2023 triggered a wider cycle of conflict across the region. The confrontation subsequently expanded to involve Iran, Israel and several Iran-aligned groups. When the United States and Israel launched military action against Iran, Tehran responded with missile and drone attacks against Saudi Arabia and other Gulf states, while disruptions around the Strait of Hormuz created serious concerns for regional oil and gas exports.

Saudi Arabia was able to reduce some of the impact by relying on its east-west oil pipeline network. The system allows crude produced in the country's eastern oil fields to be transported to the Red Sea, providing an alternative route for exports when the Persian Gulf faces disruption. From the Red Sea, Saudi oil can reach European markets through Egypt or move toward Asian markets through routes connected to the Bab el-Mandeb and Indian Ocean.

That alternative has now come under additional pressure because of renewed Houthi activity. After a period of relative calm, tensions with the Houthis escalated again in July. The group announced a blockade targeting Saudi shipping and resumed attacks on a larger scale. Recent battlefield gains have strengthened the Houthis' position along the Red Sea and could give them greater ability to threaten shipping through the Bab el-Mandeb.

The impact on Saudi oil exports has already been significant. Data from energy market monitor Kpler showed that Saudi crude shipments to Asian destinations fell sharply, dropping from approximately 3.4 million barrels per day in June to around 128,000 barrels per day in August. Exports subsequently recovered to some extent, reaching roughly 700,000 barrels per day this month, but the disruption has highlighted the vulnerability of Saudi energy flows.

The kingdom is also facing a separate threat from Iraq. Saudi Arabia recently suspended operations on a major pipeline connecting oil fields in the east with the Red Sea after drone attacks originating from Iraq. Iran maintains relationships with several powerful Iraqi militias, and regional officials have said the Houthis have provided assistance to some of these groups in carrying out attacks.

The possibility of pressure from multiple directions is particularly concerning. Saudi Arabia has already experienced years of conflict with the Houthis after launching a military intervention in Yemen in 2015. Despite extensive military involvement and support from its allies, the campaign failed to achieve a decisive victory. The war caused enormous humanitarian suffering before a ceasefire in 2022 significantly reduced the fighting.

Since then, Saudi Arabia has attempted to move away from the Yemen conflict and concentrate on economic development, investment and regional stability. The latest Houthi advances could force the kingdom to reconsider that strategy. Neil Quilliam, a Middle East specialist at Chatham House, said Riyadh faces pressure to respond, but every available option carries considerable risks.

One possibility would be a renewed military campaign against the Houthis. Such an approach could attempt to reverse their recent gains, but it could also trigger stronger attacks against Saudi oil facilities, ports and other strategic infrastructure. The Houthis' military capabilities have also improved considerably since the earlier stages of the Yemen conflict, making any new Saudi operation potentially more dangerous.

Saudi Arabia could instead pursue diplomacy, either directly with the Houthis or through talks with Iran. However, negotiations would also be difficult. The Houthis have demanded the removal of restrictions imposed by the Saudi-led coalition, while Tehran may seek significant concessions from Washington as part of any broader regional settlement.

Another major uncertainty is the extent of future American assistance. Saudi Arabia and other Gulf states have depended on US security guarantees for decades, but confidence in Washington has been tested by previous crises. In 2019, an attack claimed by the Houthis temporarily disrupted a large portion of Saudi oil production, yet the US response did not meet Riyadh's expectations.

The current situation is even more complicated because American forces are already heavily engaged around the Strait of Hormuz and in efforts to protect maritime traffic. The prolonged conflict has placed additional pressure on US military resources, including sophisticated missile-interception systems. Domestic politics could also influence Washington's calculations. The conflict has become increasingly unpopular in the United States, while Trump previously campaigned on reducing American involvement in overseas wars. Opening another military front against the Houthis could therefore create additional political difficulties for the administration ahead of congressional elections.

For Saudi Arabia, the uncertainty leaves few easy choices. A stronger military response could increase deterrence but expose the kingdom to more attacks, while diplomacy could reduce tensions but require difficult compromises. Meanwhile, threats to the Red Sea, Bab el-Mandeb and Strait of Hormuz are adding fresh uncertainty to global energy supplies. The situation is particularly significant for Mohammed bin Salman because regional stability is closely tied to his plans to transform Saudi Arabia's economy. Protecting oil infrastructure, keeping export routes open and preventing another prolonged conflict in Yemen will remain critical challenges as Riyadh tries to pursue its ambitious economic agenda amid a rapidly changing regional security environment.

Disclaimer: This image is taken from Reuters.