Iran War: How Houthis Turned Yemen's Ports Into A $5.5 Billion War Machine | Exclusive

Last Updated:March 30, 2026, 13:49 IST

At the heart of this system are three critical ports---Hodeidah Port, Salif Port, and Ras Isa Port---which are firmly under Houthi control

The Houthis’ grip over key Red Sea ports and strategic maritime routes is emerging as a serious global concern, with intelligence inputs revealing how the group has built a self-sustaining war economy that now threatens international shipping and regional stability.

An intelligence note accessed by CNN-News18 details how the group is leveraging Yemen’s dependence on imported food and fuel to generate massive revenues that fund its military operations.

At the centre of this network are three critical ports—Hodeidah Port, Salif Port and Ras Isa Port—through which the Houthis impose steep customs duties and tariffs. In some cases, these charges go up to 100 per cent on essential goods, alongside additional fees on vital food and fuel imports.

Between 2022 and 2024, the Houthis are estimated to have collected around $4 billion from fuel import duties, with total revenues, including illegal levies and profit margins, reaching approximately $5.5 billion. Yemen’s heavy reliance on imports enables the group to generate hundreds of millions of dollars each month, directly financing missile production, drone campaigns and naval operations.

The group also profits by reselling imported or smuggled fuel at inflated black-market prices, further deepening what officials describe as a “self-reinforcing war economy"—one that continues to function despite US sanctions and periodic airstrikes.

This financial independence has reduced the Houthis’ reliance on external backers, even as their operational capabilities continue to evolve.

However, intelligence inputs indicate that the network underpinning this war economy is far from local.

China has emerged as a major source of dual-use components, raw materials and electronics used in Houthi weapons production, with around 35 per cent of interdicted items in recent years traced back to Chinese origins. At the same time, Iranian oil smuggling networks, linked to operatives such as Sa’id al-Jamal, have been routing oil to Chinese “teapot" refineries, generating significant revenue streams that ultimately benefit the Houthis.

Some of these sanctioned financial and logistics networks involve entities based in Hong Kong and Malaysia with Chinese links, pointing to a wider transnational ecosystem sustaining the group’s operations. However, Beijing is understood to maintain economic ties with Iran without directly supplying military aid to the Houthis.

The Houthis’ military capabilities themselves remain heavily dependent on Iranian-supplied or Iran-derived systems, even as the group insists it has developed indigenous production and denies acting as a proxy.

The strategic implications are most visible at the Bab el-Mandeb Strait, a narrow maritime corridor that handles roughly 12% of global trade. From 2023 to 2025, the Houthis carried out more than 100 attacks on commercial vessels using missiles, drones and small boats, particularly targeting ships linked to Israel, the US, the UK and their allies.

These attacks disrupted global shipping, halving traffic through the Suez Canal and forcing vessels to take longer routes around Africa, significantly raising freight and insurance costs.

Now, the risks are escalating again. On March 28, the Houthis launched ballistic missiles targeting Israel and have threatened to renew attacks on Red Sea shipping, raising concerns of another round of disruption in one of the world’s most critical trade arteries.

In response, the United States has continued to target the broader network through sanctions spanning Yemen, Oman, the UAE and parts of East Asia, aiming to disrupt oil smuggling operations estimated to generate $1-3 billion annually, as well as weapons supply chains.

Despite these efforts, officials warn that the Houthis’ evolving financial and logistical ecosystem has made them far more resilient.

The bigger concern is that the group is no longer just a regional actor—it is an economically empowered force capable of sustaining prolonged conflict while holding global trade routes at risk.

In effect, a local war economy has now grown into a transnational security challenge with worldwide consequences.

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