Oman mediates secret US-Houthi talks as Yemen crisis deepens

As the Houthis expand their control along Yemen's Red Sea coast, US officials met with the Iran-backed group in Oman over the weekend. The talks coincided with heightened strategic importance of the Bab el-Mandeb Strait and added pressure on Saudi Arabia, according to five sources briefed on the matter cited by Reuters.

Oman helped arrange the meeting, which was reportedly held at the US Embassy in Muscat. While the State Department did not confirm the gathering, it said safeguarding Red Sea navigation and preventing terrorism from the Middle East remain core US interests.

Two sources said Houthi representatives assured US officials they would not target American ships and would uphold the 2025 ceasefire with Washington. A Yemeni source added that the Houthis also indicated they would avoid attacking Israeli or commercial vessels, with Saudi Arabian ships specifically excluded. That carve-out keeps a significant risk for markets.

Saudi Crown Prince Mohammed bin Salman reportedly spoke with Trump last week to request US military aid after the Houthi gains. Reuters separately reported that Washington told Riyadh it would not become directly involved in the conflict. Market participants now focus on whether the latest diplomatic contacts can prevent the conflict from spreading to regional shipping and energy infrastructure.

A de-escalation in Houthi-Saudi tensions could lower oil prices in the short term, ease concerns and prompt a dovish repricing, according to an observer. That might then fuel a relief rally in risk assets, lifting stocks, gold and bitcoin.