The internationally recognised government, represented by the Presidential Leadership Council under Rashad al-Alimi, has launched a major counter-offensive to recapture territory lost to the Houthi militia in September, and fierce fighting continues. The government says it has regained strategic positions along the western coast, particularly around the Bab al-Mandab Strait and Mocha, while making advances on several fronts in Taiz, but government control over all of Yemen remains some way off. The Houthis still hold the capital, Sanaa, and vast areas in the north and west.
For a country that needs economic help, government battlefield advances could strengthen its efforts to revive crude oil exports. Yemen holds significant oil reserves, but the situation has made it impossible to extract and export them in volume.
Still, oil is on the minds of leaders. On 20 July 2026, Alimi announced that crude exports from government-controlled areas would resume, following their suspension in the wake of Houthi attacks on export terminals in Hadramawt and Shabwa in October 2022. The money raised will pay salaries, finance public services, and support economic stability, he said.
Before exports ground to a halt, oil was Yemen’s principal source of foreign currency and government revenue, accounting for around 70% of the latter. Production began in 1986 at 10,000 barrels per day (bpd), with exports rising rapidly thereafter. It brought in the foreign currency needed to finance imports, sustain public finances, and support the balance of payments, helping to ease pressure on foreign exchange reserves and the national currency.
Yemen’s oil industry entered its golden age around the turn of the millennium, production hitting 400,000 bpd in 1999, before peaking at 457,000 bpd in 2002. But structural, political and security challenges then contributed to a decline, as did natural depletion in major fields like Marib and Masila, together with insufficient investment and exploration. Combined, this led to the rising cost of developing remaining reserves.
Repeated attacks on pipelines and oil installations disrupted production, and the outbreak of civil war in 2015 saw foreign companies withdraw. Production, maintenance, and investment were all adversely affected, and vital infrastructure was damaged. Although output recovered partially from 2016, it remained well below pre-war levels.
Fighting resumed in 2022, when the Houthis attacked export terminals, bringing crude shipments to a halt. Producers now had no secure, commercially viable export outlet. Companies declared a ‘force majeure’ and suspended or curtailed exploration and production operations across most concession areas.
Production dropped to 51,400 bpd in 2022, then to 22,000 bpd in 2023, and 19,000 bpd in 2024, according to the International Monetary Fund (IMF). These are paltry figures for a country with proven oil reserves of around three billion barrels (estimated in 2009, according to historical data cited by the Energy Research Unit).
In the ground
Oil production is currently concentrated in two principal sedimentary basins: Sayun-Masila in Hadramawt and Marib-Shabwa (also known as the Sabatayn Basin). These are two of Yemen’s 12 sedimentary basins. According to Yemen’s Petroleum Exploration and Production Authority, the country has 105 oil concession blocks, of which 13 are producing. Other basins and prospective areas remain largely unexplored and have yet to enter commercial oil production.
In October and November 2022, the Houthis intensified their attacks on oil export terminals in government-controlled areas, targeting Rudum (also known as Nashima) in Shabwa, and Al-Dabba in Hadramawt. At Al-Dabba, two drones targeted the Nissos Kea tanker on 21 October as it prepared to load two million barrels of crude. The attack followed a threat against another tanker, the Maran Canopus, whose owner later decided not to let the vessel enter the port.
Although the attacks caused no significant casualties or material damage, they effectively halted oil exports. Tankers chose not to berth at Yemeni ports, and further strikes in November prevented other vessels from loading crude. A December 2022 report by the Economic Studies and Media Centre, titled The Flames of War Spread East to the Oilfields, concluded that the attacks on Al-Dabba and Rudum had extended the conflict to oil export terminals in government-held territory.
The Houthi attacks may have been intended to secure their demands over a share of national oil revenues. During truce negotiations, Houthi representatives demanded that oil and gas revenues be used to pay public-sector salaries in areas under the group’s control, including those of military and security personnel affiliated with the movement. The government rejected that demand. The Houthis also sought a share of crude export revenues, which was also rejected by the government in 2022.
With the suspension of oil exports, Yemen's economic and humanitarian difficulties deepened, with rising prices, further currency depreciation, worsening poverty, and an erosion of purchasing power, as the Houthis warned oil companies, oilfield service providers, and shipping firms to cease all activity or risk attack. The warring parties therefore reached an impasse, as Yemenis suffered.
Ports and oilfields
Since seizing Sanaa in 2014, the Houthis have sought to extend their territorial control towards the country's main oil-producing regions, particularly Marib, Shabwa and Hadramawt, but the main oilfields remained beyond their reach. A Houthi offensive against Marib in 2021 failed. This kept one of Yemen's most important oil- and gas-producing regions out of Houthi control, denying the group export revenues (it was after they failed to seize the main producing fields that the Houthis targeted export infrastructure, attacking Al-Dabba and Rudum in late 2022).
The Houthis did, however, retain control of the Red Sea ports of Hodeidah, Ras Isa, and Salif. Through these ports, they collected customs duties, taxes, and other levies on imported fuel, while also exercising considerable control over the trade in petroleum products within their territory. Oil thus became an instrument in the struggle for power, extending its significance beyond the revenue it generated.
