Key Takeaways:
A Houthi drone attack on Tel Aviv on July 19 led to an Israeli retaliation; the Israeli Air Force targeted military and energy infrastructure in the Houthi-controlled port of Hodeidah.
The security situation in the Red Sea remains precarious, and the future for merchant shipping is bleak as the status quo favouring high security and insurance costs remains, with American and British naval assets continuing to engage Houthi threats.
Israel’s attack on the Houthi-controlled Port of Hodeidah occurred just over a week before Iranian President-elect Masoud Pezeshkian’s inauguration; Pezeshkian is likely to present a cabinet that could improve relations with the West.
On July 20, 2024, the Israeli Air Force struck the Houthi-controlled Yemeni port of Hodeidah in retaliation for a Houthi drone attack in central Tel Aviv on July 19, which killed one person and injured four others. Hodeidah supports storage facilities capable of storing a range of oil grades and was used to facilitate ship-to-ship oil transfer from the FSO Safer, a floating oil storage and offloading vessel moored off the Yemeni coast, previously at risk of breaking apart. The Israeli Air Force targeted military infrastructure, oil storage facilities, and a power station, which ignited a large fire. Israel has frequently maintained its readiness to respond to any attacks on its soil, and the successful execution of land-based attacks by both the Houthis and IDF represents an escalation in the hostilities that have accompanied the Israel-Hamas war. KSG assesses that further direct attacks are almost inevitable as both sides attempt to maintain the upper hand and outmanoeuvre one another militarily.
The situation in the Red Sea has not improved since KSG’s last assessment. As Houthis continue their attacks on merchant shipping, matters in the Red Sea are further complicated and render a resolution more difficult to reach. KSG evaluates that the security situation is highly likely to continue to deteriorate. American and British naval assets continue to be preoccupied with sustained Houthi attacks on naval assets and merchant shipping as recently as July 21. The Commander of U.S. Central Command, General Michael Erik Kurilla, responsible for operations in the Middle East, has also recently made trips to Egypt and Israel to discuss security challenges in Gaza and the Red Sea. This suggests that solutions continue to be explored vis-à-vis the situation in the Red Sea. This was made particularly apparent by General Kurilla’s visit to the Suez Canal Authority while in Egypt, where he met Admiral Osama Rabie, the Authority’s Chairman and Managing Director. The visit focused on the economic impact of attacks on international shipping from Iranian-backed Houthi attacks in the Red Sea and Gulf of Aden. Nonetheless, KSG considers it very likely that naval operations conducted by American and British forces will continue due to a lack of alternative options and diplomatic efforts lagging behind.
However, a diplomatic opportunity might present itself following the inauguration of the Iranian President-elect, Masoud Pezeshkian. The reformist candidate, whose electoral victory shocked many, is expected to present his cabinet appointments to the Parliament after his inauguration on July 30, 2024. Pezeshkian’s appointments need to be discussed by lawmakers and pass a final vote of confidence; however, his campaign proposed greater cooperation with the West, especially to help lift economic sanctions on Iran. However, enthusiasm should be curbed given that Pezeshkian does not have total control over the appointment process and is heavily influenced by the approval of Ayatollah Khamenei, Iran’s Supreme Leader. Nonetheless, KSG still considers it likely that a more outward-looking cabinet will be elected, given the centrality of greater international cooperation to Pezeshkian’s election campaign. Moreover, given that Western governments generally view Iran as responsible for preventing Houthi attacks, this presents a good topic over which to renew diplomatic engagement.
Looking Forward:
KSG expects hostility in the Red Sea to continue over the coming weeks, with persistent attacks on merchant shipping and continued Western naval engagement with Houthi attackers.
Although the Houthis carried out a successful attack on Israeli soil, KSG assesses that while similar attacks are likely to be conducted in the future, they are unlikely to become the new norm or replace the existing Red Sea theatre as their major focus. This is due to the heavy repercussions such attacks solicit, as seen by Israel’s attack on Hodeidah.
KSG assesses that the Iranian government under President-elect Masoud Pezeshkian will initiate dialogue with Western and Arab states that Iran is traditionally opposed to, having announced his intention to improve relations with the West during his election campaign. The degree to which the new cabinet will adopt a reformist approach and change the course of its foreign policy will be defined by the period immediately following Pezeshkian’s inauguration. This is due to Ayatollah Khamenei’s control over the nomination and ratification process. KSG assesses that any dialogue is likely to address Houthi attacks in the Red Sea, the deteriorating situation between Hezbollah and Israel along the Lebanese-Israeli border, and the IDF’s operations in Gaza.
KSG considers it likely that European states will utilize the election of a reformist Iranian president as an opportunity to push for the United States to forge greater direct engagement with Iran. European states will likely face pressure from business and lobby groups to help stabilize the Red Sea, lower shipping and insurance costs, and, therefore, help resolve one of the major economic challenges European industry faces.
By Jake Glasmacher, Middle East Analyst