President Donald Trump has reportedly authorized Saudi Arabia to resume military strikes against Yemen’s Houthi rebels, according to Axios. This action represents a shift in U.S. policy, allowing regional allies such as Saudi Arabia to lead offensive operations rather than direct U.S. involvement. The escalation comes in response to renewed Houthi attacks on Red Sea shipping and a recent clash that resulted in the deaths of 16 government soldiers. The conflict, ongoing since 2014, involves the Iran-backed Houthis and the Saudi-backed Yemeni government. This development marks a significant change in strategy following a previously brokered ceasefire by Oman in 2025.
Key Takeaways
- The announcement appears to increase geopolitical tensions, with markets suggesting a higher likelihood of Iranian military action against Gulf states.
- The market for Iranian action against a Gulf state on July 13 reflects a strong expectation of conflict, with a 90% YES likelihood, up from 74% the previous day.
- Trump’s authorization is consistent with scenarios where regional actors take more aggressive stances, potentially impacting related geopolitical markets.
What to Watch
Markets will be monitoring any further military actions by Saudi Arabia and Iran’s response, as these could influence the likelihood of broader regional conflict. The July 13 market date shows a significant increase in tension, suggesting that market participants expect potential catalysts around that time. Additionally, any diplomatic interventions or shifts in U.S. foreign policy could alter the current trajectory and affect market expectations.
