The administration has a broader geopolitical agenda—one that includes countering China’s economic leverage, particularly Beijing’s reliance on Iranian oil.
President Donald Trump, in his first week in office, pledged to designate Ansarallah (“Partisans of God”), commonly known as the Houthis in Yemen, as a Foreign Terrorist Organization (FTO). The decision came into effect in early March. Weeks later, on March 15, President Trump ordered large-scale air and naval strikes against dozens of targets in Yemen in areas controlled by the Iran-backed group.
By greenlighting the largest military bombardment yet in Trump’s second term, the United States has set out to meet several objectives at once: erode the Houthi’s military capability, implement “maximum pressure” against Iran’s ability to finance its proxies, and send a warning to buyers of Iran’s sanctioned crude oil, chiefly China.
The Trump administration has justified its use of lethal force against the Houthis as a necessary measure to uphold the “core principle of freedom of navigation upon which international trade and commerce depend.” However, Washington’s calculations extend beyond maritime security.
The administration has a broader geopolitical agenda—one that includes countering China’s economic leverage, particularly Beijing’s reliance on Iranian oil. By targeting the Houthis, the United States is not only safeguarding vital shipping lanes but also exerting pressure on the Iran-China energy nexus, a key component of Beijing’s strategic posture in the region.
U.S. military action is also designed to prevent the Houthis from consolidating power domestically in the fragile peace process there and its ability to regroup in support of a revamped Iranian forward defense doctrine that relies on financing its proxies. A sustained U.S. military campaign may degrade the Houthi military arsenal and possibly decapitate its leadership.
But the Houthis command a diversified war economy that allows it to profit from the illegal smuggling of commodities that range from fuel and cigarettes to dual-use components and military-grade material while also extracting tax revenues as a de facto state-like entity. This makes the U.S. and Western sanctions regime a vital pillar of countering the Houthis, but their deepening ties with major actors complicate sanction effectiveness.
Can the Houthis Count on China and Russia?
China was the primary destination for up to 90 percent of Iran’s oil exports in 2024, underscoring the deepening economic ties between Beijing and Tehran despite U.S. sanctions. By helping fill Iranian coffers, China aids Iran’s Islamic Revolutionary Guard Corps (IRGC) in financing proxies like the Houthis. Since October of last year, notable U.S. Treasury announcements have revealed covert links between China and the Houthis.
The U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Houthi operatives based in both Yemen and China for their roles in facilitating weapons transfers and dual-use components into Yemen. For example, Safwan Al-Dubai Company of Shipping and Trade (Safwan Al-Dubai) is described as a Yemen-based shipping and logistics company that maintains a presence in China, part of a shell front ecosystem that enables Houthi operatives to obfuscate weapons shipments. Several Chinese-based companies were also sanctioned in October for facilitating the transfer of dual-use items to the Houthis.
The revelation exposed a shadowy network linking China and the Houthis, raising critical questions for U.S. security and defense policymakers. Striking the Houthis could trigger broader repercussions—not least by disrupting the flow of Iranian oil to China. While difficult to confirm, it is conceivable and has been reported, that the Houthis may have received financial or other forms of compensation from China (such as Chinese-made military components) in exchange for allowing freedom of passage for China-affiliated vessels in the Red Sea.
The U.S. Treasury recently announced sanctions on Iran’s oil minister, Mohsen Paknejad, as well as on a “network of shipping facilitators in multiple jurisdictions who, through obfuscation and deception, load and transport Iranian oil for sale to buyers in Asia.” The sanctions target maritime service providers, including three companies and three vessels, that facilitated ship-to-ship (STS) transfer operations for Iran’s petroleum trade outside port limits in Southeast Asia. This follows sanctions targeting individuals, entities, and vessels in February for smuggling millions of barrels of Iranian oil worth hundreds of millions of dollars, largely destined for China.
As part of its counter-U.S. foreign policy, Russia is reported to have provided satellite targeting data to the Houthis against U.S. ships in the Red Sea and adjacent waterways. The Russia-Houthi link, which grew during the Gaza conflict, was further exposed when, on March 5, OFAC sanctioned seven high-ranking Houthi members responsible for smuggling military-grade items and weapon systems and negotiating Houthi weapons procurements from Russia, as well as one Houthi-affiliated operative who may have recruited hundreds of Yemeni civilians to fight on the frontlines in Ukraine on behalf of Russia. With Putin now focused on the U.S.-brokered ceasefire terms in Ukraine, Moscow will be less inclined to back the Houthis, which was a pragmatic leverage tool rather than a long-term strategy.
On March 14, a trilateral meeting between Russia, Iran, and China was convened in Beijing to discuss Iran’s nuclear program, among other issues. The diplomatspresent “emphasised the necessity of terminating all unlawful unilateral sanctions.” With China profiting from sanctions-busting and cheap Iranian oil purchases, the rationale is clear. But this is only one dimension of the relationship. Beijing sees value in preserving ties with Tehran, which will allow it to exert influence over or spoil future U.S.-Iran talks and a possible nuclear deal.
In mid-March, the three states conducted joint naval exercises dubbed “Maritime Security Belt 2025” in the Gulf of Oman. Geopolitical tensions in strategic Middle East waterways are likely to ratchet up in the coming years against the backdrop of unresolved U.S.-Iran tensions.
An Evolving Axis?
The Houthis have proven to be an asset worth investing in for Iran, which in the long term will likely look to empower the Houthis’ capabilities to continue the maritime blockade in the Red Sea and possibly beyond. Their value in Iran’s eyes has only grown since the losses that Iranian networks incurred in Lebanon, Gaza, and Syria.
With Iran’s ability to transfer financial and technical support to the Houthis curtailed, the group is likely to ramp up its illicit smuggling networks in the transit of drugs, oil, and tobacco to boost its economic and organizational resilience. A brewing threat lies in the cross-pollination and alliance-making between the Houthis and the terrorist group Al Qaeda in the Arab Peninsula and al-Shabaab in Somalia. If the Houthis decide that their attacks are failing to cause significant damage, they may expand their area of kinetic activity from the Red Sea and Bab al-Mandab strait to the Horn of Africa.
By targeting the Houthis within the maximum pressure campaign against Iran, the United States is also demonstrating that it will not hold back from striking against armed groups aligned with Iran. This raises the question of whether Iran-linked Shia militia in Iraq could be targeted in the coming months as the United States ramps up its pressure on Baghdad to demilitarize these groups and expel Iranian influence from the country ahead of the parliamentary elections for October.
Burcu Ozcelik is a Senior Research Fellow in Middle East Security at the Royal United Services Institute in London. She holds a PhD from the University of Cambridge.
Image: Mohammad Bash / Shutterstock.com.