Yemen’s Houthis Are Getting Bolder. China Benefits.

Yemen’s Houthi fighters took over the Galaxy Leader Cargo in the Red Sea in 2023. (Houthi Movement / Getty Images)

About the author: Leslie Palti-Guzman is the founder of Energy Vista, a strategic advisory firm. She hosts the Energy Vista podcast and is a non-resident fellow at the Center for International Studies and at New York University’s Center for Global Affairs.

For more than a year and a half, the Iranian-backed Houthis have disrupted global shipping by attacking vessels in the Red Sea. Neither appeasement nor deterrence has worked to stop them. Instead, they have grown more emboldened, emerging as a strategic tool in a wider geopolitical contest.

Western governments continue to downplay the Houthi threat—not only because global trade has adapted by detouring around Africa’s Cape of Good Hope, but also because nothing they have done has worked to stop the Houthis so far. But the West is missing the big picture: The Houthis’ actions are helping China win its geoeconomic war on the U.S. and boosting Qatar’s energy wealth and access to Asian markets, all at the expense of the U.S.

China is waging an economic war, helped by its access to the Red Sea and alliance with Iran and Russia, while Qatar is benefitting from the fragmentation of global trade undermining U.S. economic interests. It is time for Washington to focus on the geoeconomic implications of the Houthis’ attacks.

Israeli and U.S. bombing campaigns, followed by a limited U.S.-Houthi ceasefire earlier this year, have done little to curb the Houthis’ attacks. In early July, the Houthis sank two Greek-owned ships in international waters off Yemen, killing several crew members and taking 11 hostage. They have targeted Israel with at least 68 ballistic missiles and 18 drones since March 18, when Israeli operations in Gaza resumed. But even a permanent ceasefire in Gaza is unlikely to change their motivations: seeking glory, gaining regional legitimacy, and rallying support inside Yemen.

The Houthis are not the Robin Hood of the Middle East. They will likely continue to obstruct U.S. access to a major trading route in the Red Sea. That serves the interests of U.S. geoeconomic rivals by weakening the global rules-based order and creating a sea lane for bad actors who want to bypass it.

The Houthis have become the maritime enabler of sanctioned oil transits and Chinese trade. The Red Sea is fast becoming the main artery for actors evading international sanctions and making economic gains at the expense of the West. Russia has been caught storing its sanctioned Russian crude, destined ultimately for China, on a floating tanker in the Red Sea. The Houthis are allowing Chinese ships to pass through the Red Sea’s Bab el-Mandeb strait “untouched,” thanks to apparent backdoor agreements.

Meanwhile, Western vessels, including containers and commodity tankers, are still rerouting around Africa, navigating waters known for dangerous maritime conditions. They must bear the extra cost of longer voyages via the Cape of Good Hope, which adds at least two weeks to transit time. As a result, Chinese goods have become more competitive.

In exchange for guaranteeing China, Russia, and Iran safe transit and hybrid warfare on Western assets, the Houthis are getting intelligence, weaponry, and diplomatic assistance from the axis. The Houthis are even fast rebuilding their battered stocks of weapons thanks to shipments from their patrons; Yemeni forces recently intercepted off Yemen a shipment carrying 750 tons of Iranian arms bound for the Houthis.

The Bab el-Mandeb is the second route now becoming a “reserved” lane for sanctioned Russia-China trade. I’ve noted in Barron’s before that the growing use of the Arctic’s Northern Sea Route for Russia.-China commodity trade—particularly liquefied natural gas—poses a strategic threat to the Western international order. It enables Russia to more easily evade sanctions, reduces reliance on traditional transit routes, and takes advantage of warming temperatures that could one day make the route navigable year-round. Arctic LNG 2, a processing and export facility that is under U.S. sanctions, has recently restarted operations, and its gas is being carried aboard the Russian shadow fleet, according to open-source data.

The implication is that even without a military confrontation, Russia and China could disrupt global trade flows and the world order simply by leveraging its commercial footprint and maritime access, both in the Northern Sea Route and now in the Red Sea.

The disruption caused by the Houthis at the Bab el-Mandeb has exacerbated a recent reconfiguration of LNG trade caused by the war in Ukraine and the bottleneck of the Panama Canal.The new intra-regionalization of trade limits economic competition between the U.S. and Qatar. The Russian gas vacuum in Europe benefits both LNG exporters. The avoidance of the Red Sea route by all LNG tankers has also given Doha an economic cover to keep its flexible Qatari LNG in the Pacific, while U.S. LNG stays in the Atlantic. In the first half of 2025, the U.S. exported roughly 80% of its LNG to Europe. Qatar exported 80% to Asia.

This new distribution of market share spares Doha from competing with U.S. volumes head-on. Crucially, it also avoids raising difficult questions about the U.S.-Qatar security relationship, which might otherwise be under more scrutiny over Qatar’s questionable geopolitical positioning. Qatar hosts a major U.S. military base, while simultaneously maintaining strategic ambiguity in its ties with the Houthis, Iran, Hamas and the Muslim brotherhood.

These shipping disruptions have helped create a floor for gas and LNG prices, which have remained high, around $12 per mmbtu. Prices would have been lower—perhaps in the $8 per mmbtu range—if Qatari cargoes could flow to Europe via the Suez Canal, creating increased competition in Europe.

However, the U.S. and Qatar will likely end up on a collision course. Both countries are experiencing a surge on LNG export capacity that will intensify their rivalry over market share. The U.S. is adding 110 million tons of new capacity, bringing its total to 200 million tons by 2030. Meanwhile, Qatar’s North Field East will boost its capacity from 77 to 110 million tons, with North Field South adding another 16 million tons by decade’s end.

Qatar would benefit economically were the U.S. market reach to be limited and its potential shipping routes constrained. Competition will rise in the coming years if Asia becomes the premium market again for a sustained period, and if the Panama Canal or Bab el-Mandeb chokepoints are resolved—or if Russian gas returns.

It isn’t in Qatar’s geoeconomic interest to see a resolution of the Houthi problem anytime soon. Washington should take notice—and act accordingly.

The longer the West tolerates the Houthis’ actions, the more leverage it cedes in critical maritime corridors and global energy markets. It is time to stop treating the Houthis as a contained threat and start recognizing them as a central actor in a shifting global order.

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