Unpacking the Expanding War Economy and Financial Networks of the Houthis in Yemen

A man walks in front of a mural symbolising restrictions on shipping through the Bab al-Mandeb Strait, one of the world's key shipping lanes, in Sanaa, Yemen, Monday, September 14, 2026. The rapid advance by Yemen’s Houthis down the country’s Red Sea coast has raised questions over whether the group could turn its territorial gains into new sources of revenue, adding to an already extensive war economy.

However, the Houthis already had control of large sections of the Red Sea coast, including the major port city of Hodeidah, and the financial benefits associated with that. Their military gains over the past week do not necessarily change the restrictions they have to deal with as an internationally unrecognised governing authority. Ahmed al-Shalafi, Al Jazeera’s Yemeni affairs editor, noted that the advance has been a geographical and military gain rather than an economic one, as it fails to remove the international sanctions restricting formal commercial exploitation.

Despite this, the Houthis enjoy significant financial benefits from their long-time control of northwestern Yemen, the most populous part of the country. Since capturing the capital Sanaa in September 2014, the group has developed a centralised financial system to collect revenues through taxes, customs duties, zakat, and other levies. A July report by the Mokha Center for Strategic Studies described this as a parallel economy, generating approximately $2.5bn annually in direct and indirect resources and costs.

Furthermore, Houthi authorities have revoked the licenses of 4,225 established commercial agencies, according to a July report by the Sana’a Center for Strategic Studies. While the Houthis claimed these agencies failed to renew registrations for three years, economic researcher Houssam al-Saeedi described the move as a deliberate restructuring to replace existing capital with businesses affiliated with the group.

Beyond internal revenues, the US government alleges that illicit oil trading remains a crucial external financing source, generating over $2bn annually through Iranian support and complex smuggling networks. Amid these financial operations, a domestic crisis persists, with millions requiring humanitarian assistance as public sector employees remain unpaid, prompting widespread public discontent.