The war in Yemen has entered a new phase of escalation. The conflict has seen the largest shift in territorial control and the highest casualties in nearly five years, with fighting on frontlines across the country, including the governorates of Taiz, Hudaydah, Lahj, Al-Dhalea, Al-Bayda, Abyan, Shabwa, Marib, and Al-Jawf.

The Houthi group (Ansar Allah) broke through government lines in the first week of September, seizing the historic Red Sea port city of Al-Makha. Taiz city is now reportedly completely encircled by Houthi forces, with intense fighting in the mountains and on its outskirts as the group targets key roads and checkpoints. Saudi Arabia has resumed airstrikes in Yemen, and Houthi drone and missile strikes have targeted Saudi tankers and energy facilities as well as Riyadh Airport.

The escalation began with the arrival of an Iranian civilian aircraft at Sana’a Airport on July 3. On July 13, a second Iranian aircraft attempted to land at Sana’a, but was prevented by strikes on the airport and diverted to Hudaydah. Houthi military spokesperson Yahya Sarea subsequently announced a retaliatory blockade of Saudi air and sea ports, prompting further escalation between the Houthis, Saudi Arabia, and the internationally recognized government.

Yemenis fleeing the fighting have endured enormous suffering. Many were forced to flee their homes abruptly as the Houthis advanced. Displaced people have reportedly been robbed, including at checkpoints at the entrances to Aden, and have been left out in the open without food, water, or assistance..

The humanitarian situation remains dire. UNOCHA reported that at least 213,000 people have been displaced since the start of September, while Yemen’s 2026 Humanitarian Plan has received only 20 percent of its requested funding so far. According to the World Food Programme, severe food deprivation across Yemen had expanded to 36 percent of households by May, with 62 percent struggling to meet their minimum food needs. The health sector is experiencing shortages of 60 percent of its essential medicines, along with a complete absence of 10 to 15 key types of oncology drugs.

Negotiations dragged on for an exchange of prisoners and detainees agreed in May after it was confirmed that Islah leader Mohammed Qahtan had died in Houthi custody. There had been considerable speculation about his fate, and the manner of his death has yet to be determined. The agreed prisoner swap, set to be among the largest in the conflict’s history, has been postponed indefinitely by the recent fighting.

The Al-Rayyan tribal matareh, the largest such gathering in years, ended after attendees accepted a government offer to support pro-government forces on frontlines in Al-Jawf. The gathering ultimately hosted thousands of participants, representing 128 tribes from across Yemen. The encampments effectively ended after the tribes advanced toward Al-Yatmah to support pro-government forces. Disagreements had also arisen between tribal sheikh Hamad bin Fadgham, who issued the call for assistance, and Abdellatif al-Qibli Nimran, appointed to replace him as leader.

Foreign Minister Afrah al-Zouba took the constitutional oath, assuming the position previously held by Prime Minister Shaya al-Zindani. Former Prime Minister Salem bin Breik filled the vacant ambassadorial post in Riyadh.

The price of the new rial remained stable but depreciated 1 percent to YR1,580 per US$1 following military escalation on the West Coast, which has complicated the monetary and economic landscape. In Houthi-controlled areas, the old rial remained almost flat, trading at YR533 per US$1. On September 3, the Saudi Development and Reconstruction Program for Yemen (SDRPY) announced new support for the government-affiliated Central Bank of Yemen in Aden, reportedly totaling US$42 million, intended to replenish the bank’s foreign exchange reserves. The security situation threatens the currency’s stability, and without further support, downward pressure is likely to persist.

Power outages lasting up to 18 hours have affected Aden and cities in Hadramawt. Generators paid for by the SDRPY to help ameliorate the situation have yet to come online. Aden also continues to suffer a severe cooking gas shortage that has persisted since the end of last year. The shortage has paralyzed public transportation, as buses and other vehicles have been converted to run on cooking gas to offset the high costs of imported fuel. Gas has become unaffordable for poorer households.

Fuel prices in government-controlled areas increased by up to 30 percent in September compared to February 2026, reaching their highest level since August 2025. The rise was primarily due to surging global crude oil prices and maritime insurance costs. Local fuel prices rose by 40 to 44 percent year-on-year in US dollar terms. In mid-September, the Houthis increased the price of a liter of gasoline in the territories they control by 10.5 percent, bringing the cost of a 20-liter jerrycan to YR10,500. Diesel prices rose by 21 percent, with a 20-liter jerrycan now selling for YR11,500.

The government-run National Committee for Regulating and Financing Imports announced a ban on the import and circulation of Iranian goods and products. In a move calculated to draw shipping traffic, the Houthi-affiliated Red Sea Ports Authority and Tax and Customs Authority announced reductions of up to 50 percent on vessel and container fees and port taxes, effective October 1.

On September 19, the government announced plans to expand the high-speed satellite internet service Starlink to new areas. The extended internet coverage included the governorates of Taiz, Marib, and Hudaydah, as well as Al-Makha. The government first announced the introduction of the Starlink service in Aden two years ago, making Yemen the first country in the Middle East to offer it.