Houthis Open New Front as War Enters Second Month

Osomon Consultancy LLC-FZ | Saturday, 28 March 2026 | 20:44 GMT

Yemen's Houthi rebels confirmed their first attack on Israel since the war began, firing a ballistic missile at military sites in the southern occupied West Bank. Israel said it intercepted the missile. Brigadier-General Yahya Saree said attacks would continue 'until the aggression against all fronts of the resistance ceases' (Al Jazeera, Time via Houthi broadcast). This ends Houthi restraint observed since the October 2025 Gaza ceasefire. → Wider war

At least 15 US service members were wounded in an Iranian strike on Prince Sultan Air Base in Saudi Arabia, including at least five in serious condition. The attack comprised six ballistic missiles and 29 drones (AP). CENTCOM separately disclosed that more than 300 US service members have been wounded in the war to date, with 13 killed (Fortune/AP). → Wider war

Iran launched a missile salvo that struck a commercial street in Tel Aviv, killing one man and wounding several others (Al Jazeera, Israeli emergency services). → Quagmire

The Israeli Air Force struck the Arak heavy water plant, described by the IDF as a 'key plutonium production site.' A separate US-Israeli strike targeted the Bushehr nuclear power plant; Iran's Atomic Energy Organization said it caused no material damage (Al Jazeera/AP). → Wider war

A US-Israeli attack targeted a major water source in the city of Haftgel, western Iran, according to security officials (Al Jazeera live). Iranian state-affiliated media reported heavy bombardment across Tehran on Saturday evening. → Wider war

Iranian Red Crescent, via CNN and Al Jazeera, reported at least 1,900 people killed and 20,000 injured in Iran since 28 February. → Quagmire

Lloyd's List Intelligence data, reported by USNI News, showed only 142 transits through the Strait of Hormuz between 1 and 25 March, compared with 2,652 in the same period in 2025, a reduction of approximately 95 per cent. The IRGC announced on 27 March that the strait is closed to vessels going 'to and from' ports of the US, Israel, and their allies. Iran separately agreed to allow 20 Pakistani-flagged ships to pass at two per day (Pakistan FM Ishaq Dar, via CNN). → Wider war

The UAE and Bahrain said they intercepted Iranian drones overnight (NPR/AFP). → Wider war

At least 1,189 people have been killed in Israeli strikes in Lebanon since 2 March, including 124 children (Lebanon Health Ministry, via CNN). WHO said nine paramedics were killed Saturday in five attacks in southern Lebanon, bringing March health worker deaths to at least 51. Israeli troops entered Khiam and clashed with Hezbollah near Tyre as Israel pushes toward the Litani River (Al Jazeera). → Quagmire

Trump paused planned attacks on Iran's energy infrastructure until 6 April at 20:00 ET, saying talks are 'going very well' (Al Jazeera/CNN). Pakistan will host foreign ministers from Saudi Arabia, Turkey, and Egypt for two days starting Monday; no mention of US or Iranian participation (NPR). The G7 issued a joint statement from Vaux-de-Cernay calling for 'immediate cessation of attacks against civilians' and restoration of 'safe and toll free freedom of navigation' in the Strait (NPR/Reuters). → Off-ramp

Trump said he is 'very disappointed' with NATO's response, accusing the alliance of failing to support Washington (Al Jazeera/Reuters). UK PM Starmer said he did 'not believe in regime change from the skies'; the UK has not participated militarily (House of Commons Library). → Quagmire

Several Republicans emerged from a classified briefing frustrated with the lack of clarity on the war's endgame. House Armed Services Committee chair Rep. Mike Rogers (R-AL) said: 'We want to know more' (news wire reports). Pew Research found approximately 80 per cent of Republicans approve of Trump's handling, but support drops among younger Republicans. Tucker Carlson and Megyn Kelly have publicly criticised the war (NPR/CPAC). → Quagmire

The Houthi missile fired at Israel on Saturday is the single most consequential development since the war began. It is not the damage it caused; Israel intercepted it. It is what it reopens. The Houthi Red Sea campaign of 2024, which disrupted roughly 15 per cent of global trade for months, was ended by a ceasefire Trump himself announced in May 2025. That ceasefire is now void. Brigadier-General Saree's language, conditioning a halt on the cessation of 'aggression against all fronts of the resistance,' sets a trigger that no party currently controls. The war now has four active fronts: Iran, Lebanon, the Houthis, and the shadow war across Gulf airspace where the UAE and Bahrain are intercepting Iranian drones. Each front has its own escalation logic.



The Strait of Hormuz data released this week deserves more attention than it has received. A 95 per cent reduction in transits is not a partial disruption; it is a functional closure. The Pakistan carve-out, allowing 20 ships through at two per day, confirms Iran is managing the blockade politically rather than enforcing it kinetically against all traffic, which gives Tehran leverage it can modulate. But for global energy markets, the effect is the same: approximately 20 per cent of global oil supply and a similar share of LNG that normally transits the Strait is now subject to Iranian permission. Oil at $104 suggests the market still expects a resolution. If it does not come by mid-April, the repricing will be sharp.



Trump's pause on energy infrastructure strikes is the war's first genuine offramp signal, and it is worth parsing carefully. The pause is time-limited (until 6 April), justified by Trump's claim that talks are 'going very well,' and conspicuously unmatched by any Iranian reciprocal gesture. It reads less like a ceasefire prelude and more like a domestic pressure valve: congressional Republicans are restive, NATO allies are absent, and the US casualty count, now at 13 dead and over 300 wounded, is reaching the threshold where American public opinion historically shifts. The Pakistan-hosted ministerial on Monday, with Saudi, Turkish, and Egyptian foreign ministers but no US or Iranian presence, is diplomacy at one remove. It may produce a framework. It will not produce a ceasefire.



The market positioning reflects a consensus that this is a quagmire, not a catastrophe. The S&P at 6,369, oil at $104, and the 10-year at 4.44 per cent are all consistent with a prolonged, contained conflict. Gold at $4,493 is the outlier, pricing in tail risk that equities are not. The divergence is instructive. Gold buyers are hedging the wider scenario; equity investors are betting on the offramp. One of them is wrong. The Houthi re-entry, the near-total Hormuz closure, and the expanding Gulf intercept operations all suggest the gold market has the better read on direction, even if equities have the better read on timing.



The practical question for cross-border operators is no longer whether the war disrupts their supply chains but which chokepoint fails next. Hormuz is functionally closed. Bab el-Mandeb is now back in play. The Suez Canal, which saw a 40 per cent traffic decline during the 2024 Houthi campaign, faces renewed risk. Businesses that re-routed around the Cape of Good Hope in 2024 should dust off those contingency plans. Businesses that did not should start.

Ceasefire, oil drops to $70-80, LNG normalises. Fed cuts resume. EUR rebounds harder than GBP. Dollar weakens. Gold retreats. Equities rally.

Today: Cut from 17 per cent. Trump's energy-strike pause until 6 April and Pakistan-hosted ministerial talks starting Monday are the only concrete diplomatic developments, but the Houthi entry, expanding fronts, and absence of direct US-Iran channels cap upside.

War drags, dollar peaks Q2 then fades on US recession risk. GBP outperforms EUR (BoE can hike, ECB trapped). Oil $90-110, LNG elevated. Gold grinds higher. Equities choppy.

Today: Raised from 43 per cent. The dominant trajectory: strikes continue on both sides without resolution, congressional frustration grows, NATO stays out, oil holds the $100-110 band, and neither side escalates to the point of full regional war.

Regional escalation, Hormuz stays closed, $130+ oil, LNG spikes to $20-28. Dollar strong throughout. EUR collapses more than GBP. Gold surges. Equities enter bear market.

Today: Raised from 40 per cent. Houthi re-entry opens a fourth front, Hormuz transits are down 95 per cent, Gulf states are actively intercepting Iranian ordnance, and nuclear sites are now being struck; each development individually signals escalation.

USD

DXY at 100.19, supported by haven demand and the 10-year yield reaching 4.44 per cent. The dollar benefits from safe-haven flows so long as the conflict intensifies, but sustained war costs, congressional dissent, and the SPR drawdown create medium-term headwinds. Near-term bias remains higher unless an offramp materialises before 6 April.

EUR

EUR/USD at approximately 1.157. The euro is squeezed between European energy vulnerability (Hormuz closure directly threatens LNG supply) and relative distance from the conflict. The G7 statement signals diplomatic coordination but no material European economic shield. Downside risk toward 1.10 accelerates if Hormuz closure extends into Q2.

GBP

GBP/USD at approximately 1.334. Sterling continues to outperform the euro modestly, supported by the UK's non-participation in the conflict and lower direct energy exposure than the eurozone. Starmer's explicit rejection of military involvement provides a marginal geopolitical discount. Sterling remains vulnerable to a broader dollar rally in a wider-war scenario.

USD earners in Europe

Dollar earners with European cost bases retain a favourable position. The dollar's haven premium, elevated US yields, and European energy vulnerability all support USD strength against EUR. However, the 10-year at 4.44 per cent signals rising term premia; locking in forward cover on three to six month EUR payables is prudent before yields potentially force a broader repricing.

EUR earners

Euro earners face a deteriorating outlook. European energy costs will spike further if Hormuz remains closed into Q2, compressing margins for energy-intensive operations. Consider accelerating revenue recognition in USD or GBP where contracts permit, and hedge EUR receivables on any rally above 1.16.

GBP earners

Sterling earners benefit from the UK's distance from the conflict. GBP/EUR cross remains favourable. The risk is that a wider-war scenario drags all non-dollar currencies lower indiscriminately. Maintain modest GBP/USD hedges at current levels.

Pakistan ministerial talks (Monday): whether Saudi Arabia, Turkey, and Egypt produce a joint ceasefire proposal or merely a communiqué; any signal of US or Iranian back-channel participation.

Houthi follow-up operations: whether Saturday's missile was a one-off signal or the start of sustained Red Sea and Israel-directed attacks, which would directly threaten shipping and the Bab el-Mandeb chokepoint.

Trump's 6 April energy-strike deadline: any extension, modification, or early resumption of strikes on Iranian energy infrastructure before the deadline.

US 10-year yield trajectory: further rises above 4.50 per cent would signal the bond market is losing confidence in a short war, with implications for equity multiples and Fed flexibility.

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