If Tehran’s patronage vanished, the Houthis would face fiscal and military collapse. Their Iranian support enables missiles and resilience, but Iran’s post-war ruin and Axis retreat leave the group vulnerable to US-Saudi degradation.
If Tehran’s patronage were to disappear, the Houthis would face a severe erosion of their financial and military capabilities, with significant implications for Red Sea security. Iranian support has long underwritten the group’s missile arsenal and operational resilience, but that support is increasingly constrained by Iran’s post-war priorities and mounting economic pressures.
Iranian support dependency worsens Houthi vulnerabilities
The Yemeni terror group faces critical vulnerabilities without Iran. The United States and its allies should take notice.
Ansar Allah—the Houthi movement—in Yemen has been a destabilizing force for decades, impeding stability, threatening global commerce, and fostering extremism. The group’s unique imperatives and constraints have made it highly resilient. However, despite its continued resilience, the group will be severely vulnerable following the 2026 war in Iran. The United States should facilitate this decline through burden-sharing with regional partners and exploiting the group’s fiscal vulnerabilities.
Thus far in the Iran War, the Houthis have played a minor role, acting more as a threat than a weapon. If the ceasefire collapses, Iran could use the group to escalate the conflict, punishing the United States and the global economy further. Any threat to the global economy by the Houthis is likely to trigger retaliation by the United States and Israel, who will attempt to degrade their capabilities. However, any strikes will be largely ineffective due to the group’s kinetic resilience.
A central pillar of Houthi resilience is Iranian support. The group receives training, supplies, and funding from Islamic Revolutionary Guard Corps (IRGC) interlocutors. This partnership has posed a formidable threat to both the Bab al-Mandeb Strait and the Strait of Hormuz. However, this is a waning partnership of necessity, upon which the Houthis have built a vulnerable financial network. With its patron likely to recede from an ineffective Axis of Resistance, the group will be forced to diversify its financial network, which is already reliant on a vulnerable cryptocurrency.
To take advantage of the coming constraints and vulnerabilities of the Houthis, Washington should work with regional partners, namely Saudi Arabia, and the internationally recognized Presidential Leadership Council (PLC). The United States should take the lead on degrading the Houthis’ illicit financial network, while its partners tackle on the ground resilience.
Why Houthi resilience relies on Iranian support
The Houthis’ missile attack on Israel in March 2026 is emblematic of the group’s resilience. Despite multiple campaigns by regional and global powers to weaken the group, it remains cohesive and has the offensive capabilities to join the largest regional conflict in the 21st century. The group’s resilience stems from its topography, rentier resources, organizational structure, and fiscal versatility.
The topography of northeast Yemen, the seat of Houthi power, is mountainous with deep valleys. The northern highlands in the Sarawat Mountains provide the group with strategic depth and natural fortifications. The valleys offer the group many locations to conduct ambushes against any invading force, while the rugged terrain provides cover from airstrikes.
Yemen has two rentier resources: oil and its proximity to the Red Sea. The Houthis extract rent from the Red Sea, while the country’s oil, located in its center, is controlled by local tribes and the PLC. The Houthis derive value from their proximity to the maritime route, which has garnered them a powerful sponsor: Iran.
The Shia theocracy has provided the Houthis with the majority of their high-end munitions, as well as funding and training. The training provided is not just for combat—it also encompasses honing the group’s resilient organizational doctrine. It is important to stress that Iran supplies the group with weaponry and training, but the Houthis, for the most part, must generate their own income. The group smuggles weapons, enacts tolls on Red Sea shipping, and taxes the local population.
To increase revenue, the group has increasingly been trading munitions to other non-state actors, including al-Shabaab and Al Qaeda, in the Red Sea region. This illicit trade allows the Houthis to increase their income, intelligence, and influence on the waterway—an important aspect in their ability to menace the Red Sea and extract wealth from it. Attempting to circumvent the Houthis’ kinetic resilience and constrain this income, the United States has levied sanctions against the organization for over a decade.
The group, forced out of the global economy and reliant on its own means, built out an elusive fiscal network capable of sustaining its materiel needs. The network relies on difficult-to-track cryptocurrencies to avoid sanctions. The Houthis’ veiled fiscal network, which protects its diverse funding sources, allows the group to sustain its kinetic resilience.
Losing Iranian support
Why the Houthis Are Vulnerable
Their relationship with Iran bolsters the Houthis, but their current configuration is reliant on its patronage. Yemen is a very poor country, and its economy has been devastated by over a decade of civil war. In the current economic environment, the Houthis have limited domestic weapons development capacity, making Iranian weapons critical to their offensive posture.
The majority of the group’s high-end munitions, which it uses to menace Israel and the Red Sea, come from Iran. The Houthis have minimal weapons manufacturing capabilities beyond small drones. What it can manufacture relies on Iranian imports. In tandem with high-end munitions, Iran and its other proxy, Hezbollah, act as organizational guides, continually advising the highly resilient decentralized command structure of the Houthis. Without these key facets, the Houthis will be vulnerable.
With its “Axis of Resistance” in ruins, Iran will not only pull resources away from the Houthis because the axis has been largely ineffective in providing Iran with security. It also faces two core imperatives: the need to negotiate an end to the conflict and the need to address an economy in crisis. The first Iranian concessions in peace negotiations are likely to be those of lower value to the regime and of high value to the United States. The Axis of Resistance fits this bill. The United States has an imperative to dismantle it, and supporting the group will likely not fit in Iran’s post-war defensive strategy.
Iran’s struggling finances will also limit its ability to support the Houthis. The Iranian economy has been shattered by decades of sanctions and the recent bombing campaigns. If the IRGC is allocated less funding, its capability to smuggle munitions and parts into Yemen will be severely limited.
Without support from its patron and its steady stream of materiel, the Houthis will need to rely far more on purchasing munitions from alternative sources. These transactions will likely be conducted with cryptocurrencies. The Houthis trade primarily in cryptocurrencies, favoring the stablecoin Tether (USDT), which allows them to launder profits, trade, and procure materiel. Unlike Bitcoin, Tether’s issuers are identifiable and have complied with the United States government’s request to prosecute coins used for illicit activity, leaving the Houthis finances vulnerable.
With its materiel supply chain curbed and finances weakened, the group will likely be drawn to Yemen’s other rentier resource—oil. If the Houthis do not acquire another means of procuring weapons, they will be forced to forgo their offensive capabilities, constraining them to a defensive posture in their mountainous heartland. Diversifying into Yemen’s other rentier resource would likely help the group stabilize its finances. Yemen has considerable natural oil reserves, and while the civil war has degraded its production capacity, they still provide a sizable income.
The PLC and local tribes currently control Yemen’s oil resources. The Southern Transitional Council (STC), another faction in Yemen’s civil war, seized much of the country, including the oil fields, in late 2025. However, in early 2026, Saudi Arabia backed the PLC in retaking the territory, and the United Arab Emirates, the patron of the STC, withdrew from the conflict.
The key to these skirmishes was the topography. Yemen’s oil fields are located in arid plains and flat-topped plateaus. The open nature of these lands allowed Saudi airstrikes to degrade any STC capabilities in the region. With the group weakened, the PLC was able to reconquer lost territory, remove the STC from the conflict, and consolidate control. While the Houthis possess far greater capabilities than the STC, the conflict will once again come down to topography.
The Houthis thrive in the country’s mountainous northeast, largely safe from airstrikes by great and regional powers. However, the country’s oil fields lack this level of cover, and the Houthis have minimal air-defense capabilities. Any conflict between the Houthis and PLC outside of the mountains will likely favor the PLC when supported by Saudi airpower.
Iranian support degradation strategy
How the US Can Degrade the Houthi Threat
The Houthis will be vulnerable following the Iran War, and the United States should act. The United States has a close ally in the region, one that is deeply invested and aligned on the issue: The Kingdom of Saudi Arabia. Riyadh has spent almost two decades attempting to minimize the Houthi threat, working with partners against the group and investing resources in Yemen. Its investments against the group have been ineffective for two reasons: Houthi resilience has been too strong, and the internationally recognized government coalition has been too fractured.
Supplied by its patron, the Houthis have operated with high resilience, while the PLC has struggled to form a cohesive bulwark. The council has been a loose coalition, fractured and forced to compete with the STC. In the wake of the 2026 Iran War, this paradigm will likely be reshaped. The Houthis will be vulnerable, while the PLC has a greater capacity due to STC’s marginalization.
The United States should learn from previous campaigns against the Houthis and work with Saudi Arabia to support the PLC, while degrading the group’s economic capabilities. Previous air campaigns against the Houthis have been unsuccessful, and despite the degradation of Houthi offensive capabilities, the topography of its heartland still makes any pure air campaign ineffective. To effectively degrade Houthi capabilities, the United States should:
1-Strengthen Intelligence Sharing: The United States should expand its intelligence sharing with Saudi Arabia regarding the Houthis. While the Houthis’ command structure is highly durable, quality intelligence will heighten the efficacy of Saudi airstrikes over the country’s arid plains and plateaus, severely degrading the group’s capabilities.
2-Enhance Partner Support: To strengthen the flipped paradigm of the PLC and the Houthis, the United States must work with the Saudi to bolster the PLC. Saudi Arabia is highly motivated to curb the instability on its southern border, fueled by the Houthis, and by selling materiel to Saudi Arabia, the United States will allow a wealthy regional partner to foot the bill.
3-Place Conditions on PLC Support : The United States’ support should be conditional on Saudi and PLC adherence to international rules of war. Yemen has been racked by famine and devastated by civil war. Excessive damage to the civilian population or infrastructure could turn the international community against regional partners and minimize their strengths. To ensure this does not happen, the United States should make its support conditional.
4-Squeeze Stablecoin Usage: The United States should focus on the group’s stablecoin transactions, seizing and freezing any group-affiliated coins. Further leverage against the group’s use of stablecoins will likely push it to use an alternative—alternatives, which come with considerable transactional downsides. Stablecoins without issuers are prone to sudden value loss, are difficult to use for transactions, and are publicly trackable. Traditional cryptocurrencies, on the other hand, are unpegged and highly volatile, making them a second-rate currency for conducting transactions. Disincentivizing the Houthis’ use of Tether or any other issuer-identifiable stablecoin—through working with issuers to freeze and seize coins—will degrade the group’s fiscal capacity when it needs it most.
These recommendations are an acknowledgment that the Houthi movement, an impediment to free trade and a driver of instability in the Red Sea region, will be more vulnerable than it has been in years. The United States and its regional partners have an opportunity to curb the group, making meaningful progress toward stabilizing a key trade route and area of Islamic extremist proliferation. While the Houthis will be vulnerable, the group is highly resourceful and adaptable, and any window of opportunity is limited. If the United States does not adapt to the new strategic landscape, the Houthis will.