SEPTEMBER 15 — The Houthis are no longer merely demonstrating that they can survive a prolonged war in Yemen. 

They are showing that a comparatively small non-state actor, armed with drones, missiles and geographical advantage, can impose increasingly serious costs on the international economy.

The latest attack on Saudi Arabia’s East-West oil pipeline should therefore be understood as more than another episode in the seemingly ceaseless violence engulfing West Asia.

It is potentially a systemic shock.

Saudi Arabia could exhaust the oil stocks available for export through the Red Sea within days unless the damaged pipeline can be restarted. 

The 1,200-kilometre East-West pipeline, running across the Arabian Peninsula towards Yanbu, has become particularly important because it allows Saudi crude to bypass the troubled Strait of Hormuz.

The pipeline has recently been carrying roughly four million barrels a day. 

If those supplies cannot reach international markets, as much as 4 per cent of global oil supply could temporarily disappear. 

Saudi export stocks at Yanbu have been estimated at only five to seven days at prevailing export rates.

This is an extraordinary vulnerability.

Satellite imagery following the drone attacks reportedly showed extensive fire damage around one of the pumping facilities. 

Estimates of the time required for repairs have varied considerably, from the possibility of a partial restart relatively quickly to several weeks for more extensive restoration.

Meanwhile, the Houthis are making serious territorial gains.

Their advances along Yemen’s Red Sea coast and seizure of strategically positioned islands have increased the pressure around the Bab al-Mandab, one of the world’s most important maritime passages.

Put the pieces together and an uncomfortable strategic picture emerges.

The Strait of Hormuz is already severely constrained by the wider war involving Iran. 

Saudi Arabia consequently became increasingly dependent upon its East-West pipeline to move crude towards the Red Sea.

Now that alternative is itself vulnerable.

And further south sits the Bab al-Mandab.

Thus the danger is not simply that the Houthis are gaining territory. 

It is that military developments across Yemen are beginning to intersect with the infrastructure and geography of the global economy.

This is asymmetric warfare on an extraordinary scale.

A drone costing a fraction of the value of the infrastructure it attacks can potentially disrupt an energy artery carrying millions of barrels of crude every day. 

The economic repercussions then travel thousands of kilometres beyond the battlefield.

Oil markets have already responded.

Brent crude moved above US$108 following the latest escalation, while concerns over energy-driven inflation are once again spreading through financial markets.

For Asean, this is especially serious.

Southeast Asia may be geographically distant from Yemen, Saudi Arabia and Iran, but economically it is deeply exposed to what happens there.

Malaysia, Indonesia and Brunei may possess substantial energy resources of their own, but Asean as an integrated production system depends heavily upon affordable transportation, shipping, petrochemicals, electricity and industrial inputs.

Thailand, the Philippines, Singapore and other regional economies are deeply exposed to imported energy and international shipping costs.

Even countries that produce oil cannot insulate themselves completely from a sustained global price shock.

Higher crude prices eventually work themselves through diesel, aviation fuel, electricity generation, plastics, fertilisers, food production, logistics and manufacturing.

The consequences therefore arrive in stages.

First comes the energy shock.

Then transportation costs rise. Then businesses begin passing those costs to consumers.

Inflationary expectations strengthen. Central banks become more cautious about reducing interest rates.

Governments face growing pressure to subsidise fuel or provide assistance to households. 

Malaysian subsidies have ballooned from RM 780 million month before the war to a massive RM 11.3 Billion currently.

What began as a drone strike on a pumping station in Saudi Arabia can eventually appear as a more expensive grocery bill in Kuala Lumpur, Jakarta, Bangkok or Manila.

That is precisely why the Houthi advances cannot be regarded merely as another chapter in Yemen’s civil war.

The Houthis may believe that controlling additional territory, islands and coastal approaches strengthens their negotiating position. Militarily, that calculation is understandable.

Economically, however, the consequences are becoming much larger than Yemen. There is also a strategic paradox.

The more successful the Houthis become in disrupting Saudi energy infrastructure and threatening maritime passage through the Red Sea, the greater the probability that outside powers will eventually feel compelled to intervene more forcefully.

The Houthis can therefore win tactically while creating conditions for a much wider strategic confrontation.

Saudi Arabia faces the same dilemma.

It cannot indefinitely tolerate attacks capable of threatening the kingdom’s principal economic lifeline. 

Yet a major Saudi military response could widen the war precisely when the region desperately needs de-escalation. This is how regional wars acquire global consequences.

The international economy is constructed around several narrow geographical passages — Hormuz, Bab al-Mandab, Suez and Malacca among them. 

When two of these become unstable simultaneously, redundancy begins disappearing from the system. That should deeply concern Asean.

The Strait of Malacca itself is proof of how geography can become destiny. 

Southeast Asian governments therefore understand better than most that freedom of navigation and secure energy corridors are not abstract strategic principles. They are economic necessities.

The Houthis are undoubtedly making serious gains. 

But their expanding ability to threaten Saudi infrastructure and Red Sea shipping is also denting an already fragile global economy.

There will eventually come a point when territorial victories cease to produce political leverage and begin generating international resistance.

West Asia may be approaching that point.

Asean should consequently intensify its diplomatic message for a comprehensive ceasefire involving all relevant parties.

The region cannot determine the military balance in Yemen or reopen damaged Saudi pipelines.

But it can remind the protagonists of something increasingly difficult to ignore.

Once missiles and drones begin determining whether millions of barrels of oil can reach world markets, the war is no longer merely regional.

The entire global economy has entered the battlefield.

* Phar Kim Beng is a professor of Asean Studies, and director at the Institute of International and Asean Studies, International Islamic University Malaysia.

** This is the personal opinion of the writers or publication and does not necessarily represent the views of Malay Mail.