Geopolitical tensions in the Middle East are escalating once again, with risks now spilling over from the Strait of Hormuz to crucial shipping lanes in the Red Sea.

On Thursday, September 10, Houthi forces in Yemen reported that Saudi warplanes carried out 64 airstrikes over the past 24 hours across Yemen's Taiz, Hodeidah, Marib, and Jawf governorates, according to CCTV News. Meanwhile, CCTV cited a Wall Street Journal report indicating that "Iran has resumed production of ballistic missiles in underground facilities using stockpiled components."

According to Xinhua News Agency, a Yemeni government military officer said Thursday that the strategic Red Sea port city of Mokha in the southwestern Taiz Governorate had been captured by Houthi forces that day. Bloomberg reported that the Houthis have recently advanced toward the southern end of the Red Sea, near the strategic Bab el-Mandeb Strait, and securing Mokha would further expand their control over the area surrounding this vital waterway.

However, also citing Xinhua, Houthi forces said Thursday that international shipping through the Red Sea and the Bab el-Mandeb Strait remains "unthreatened" and safe.

Markets reacted swiftly. Following news of Iran's missile production, international crude futures extended their intraday gains to more than 7% during US midday trading on Thursday. Brent crude rose as high as $108.42 per barrel, the highest level since May 21, while US WTI crude reached $103.06 per barrel, up roughly 7.3% on the day and breaking above the $100 mark for the first time since late May.

Houthi Capture of Mokha Pushes Them Closer to Bab el-Mandeb

Xinhua's report highlighted that Mokha is not just a Red Sea port but a strategically vital location in Yemen's southwestern Taiz Governorate, and its fall underscores the Houthis' intent to advance toward the Bab el-Mandeb Strait.

A local government military officer, speaking anonymously to Xinhua, said that after hours of intense fighting, government forces were forced to retreat southward to the Zubab area, situated between Mokha and the Bab el-Mandeb Strait, allowing Houthi forces to enter Mokha.

Bloomberg reported that the Houthis have made progress in their operation to seize Mokha. Shipping security advisor Bjorn Beirens noted that taking Mokha would give the Houthis a new foothold to push further south, potentially achieving "near-total control" of the Bab el-Mandeb Strait. The loss of Mokha would "undoubtedly have implications for maritime security in the region."

Andrew Farrand, head of Middle East and North Africa affairs at geopolitical risk consultancy Horizon Engage, said the Houthis' continued advance along the coastline could reach the "strategic chokepoint" of the narrowest part of the Bab el-Mandeb Strait, which would be "a very significant setback" for Saudi military operations in Yemen.

The Bab el-Mandeb Strait connects the Red Sea to the Gulf of Aden and is one of the world's critical maritime trade routes. The Houthis have already impacted international shipping through their control of Hodeidah and other Red Sea coastal areas, and capturing Mokha further expands their footprint along the western shore of the Red Sea.

Saudi Airstrikes Intensify as Houthis Claim Retaliation

As Mokha fell, the military conflict between Saudi Arabia and the Houthis continued to escalate.

CCTV News, citing a Houthi statement, reported that Saudi warplanes conducted 64 airstrikes across four Yemeni provinces in the past 24 hours, deploying F-15 and Typhoon fighter jets from King Fahd Air Base in Taif and King Khalid Air Base in Khamis Mushait.

The Houthis also claimed they intercepted a battle formation in Taiz Governorate, using surface-to-air missiles to force it to retreat. Saudi Arabia has not yet responded to these claims.

Bloomberg reported that the Houthis have also been launching sustained missile and drone attacks on towns in southwestern Saudi Arabia, damaging energy infrastructure. Saudi authorities said recent Houthi attacks have wounded 73 people, including women and children.

The Houthis, for their part, say their actions are in retaliation for continued attacks by Saudi-backed Yemeni forces and for the Saudi blockade of ports and airports in areas under their control.

According to Xinhua, Houthi spokesman Mohammed Abdulsalam said in a statement on social media Thursday that navigation and international trade through the Red Sea and the Bab el-Mandeb Strait remain "safe and normal," and that the group's operations "do not pose a threat to international shipping." He described the Houthis' current military actions as targeted and "defensive" in nature.

What Does Iran's Resumed Missile Production Mean?

CCTV News noted that the Wall Street Journal reported that even though Iran is primarily assembling missiles on a "more limited scale" using existing components, this still undermines the "significant achievements" that the US and Israel have touted from the war.

The Wall Street Journal, citing US and Middle Eastern officials with knowledge of the matter, reported that Iran has resumed ballistic missile production in underground facilities using stockpiled components.

The report indicated that Iran is currently assembling new ballistic missiles primarily from previously stored parts, with production volumes below pre-war levels, but the activity has nevertheless resumed. Intelligence available to US and regional officials shows that Iran is using underground facilities for assembly and is attempting to sustain its missile capabilities through resumed production.

This development suggests that despite previous US and Israeli strikes on Iranian military facilities, which were claimed to have significantly degraded its ballistic missile capabilities, Iran still retains some capacity to produce and recover. Because some production facilities are located underground and the programs are highly dispersed, Iranian missile production has not fully halted as a result of the earlier strikes.

Two Key Chokepoint Risks Converge, Oil Risk Premium Heats Up

Oil's intraday surge of over 7% reflects the market's reassessment of the potential impact of Middle East conflict on global energy transportation.

Previously, the core risk was largely concentrated on the Strait of Hormuz, but with the Houthi capture of Mokha and their advance toward the Bab el-Mandeb Strait, the Red Sea 鈥?the vital shipping route connecting Europe and Asia 鈥?has once again become a focal point of geopolitical risk.

For Saudi Arabia specifically, if the Houthis push further toward the Bab el-Mandeb Strait and continue attacking Saudi Red Sea coastal facilities, Riyadh's ability to use alternate routes like the Red Sea to mitigate risks at the Strait of Hormuz could also be constrained.

With risks simultaneously rising at both the Strait of Hormuz and the Bab el-Mandeb Strait 鈥?two critical arteries for energy transport 鈥?market concerns over supply disruptions have intensified, pushing the geopolitical risk premium embedded in oil prices significantly higher.