Conflict blocks Yemen from tapping into rising oil prices

By Usman Yahaya

Amid a global surge in oil and liquefied natural gas (LNG) prices driven by intensifying regional tensions, Yemen remains unable to capitalize on its energy potential due to deep-seated internal conflict and external geopolitical pressures. Calls have grown within the country for urgent solutions to resume crude oil exports, which have been suspended since late 2022, alongside the long-halted shipments of LNG.

Analysts observe that the current global energy climate could have provided a critical lifeline for Yemen’s struggling economy, particularly as international markets brace for supply disruptions. However, the situation remains stalled by the ongoing domestic conflict. Experts emphasize that the resumption of exports is heavily dependent on the Houthi group's stance and the successful implementation of a comprehensive political roadmap backed by the United Nations.

According to oil and gas expert Abdul Ghani Jaghman, restarting the nation’s LNG infrastructure is not a simple task. He explained that it would require at least six months of intensive maintenance and an estimated $500 million in operational costs. Beyond the technical requirements, Jaghman noted that the lack of political consensus between the government and Houthi leadership remains the most significant barrier to progress.

Economic analysts also point to broader geopolitical challenges. Some suggest that international interests, including the United States, may not prioritize the restoration of Yemen’s gas exports as they manage their own influence in global energy markets amidst insecurity in the Red Sea and Bab al-Mandab. Economist Mustafa Nasr added that the immediate outlook is bleak, citing the constant security threats to export infrastructure. He noted that while oil exports are technically easier to resume than gas, both face prohibitive risks in the current climate.

In the meantime, Yemen continues to face a staggering financial drain, spending approximately $1 billion annually on fuel imports to maintain power plants. Financial experts argue that instead of focusing solely on exports, the government should prioritize domestic gas for energy generation to reduce costs and provide much-needed stability to the nation’s fragile economy.