The Houthis demanded USD 51 billion and recognition as Yemen's rulers after Saudi Arabia sought to halt renewed attacks. The ultimatum deepens Riyadh's military dilemma as the rebels advance towards Aden and target vital infrastructure.

When Saudi Arabia went looking for a way to stop the fresh escalation after Yemen's Iran-backed Houthis attacked Riyadh's oil tankers in the Red Sea, what it heard back was a demand for USD 51 billion and recognition of the rebels as Yemen's rulers, according to The Wall Street Journal.

The proposal would amount to far more than a financial settlement. Accepting it would mean Saudi Arabia effectively recognising an Iran-backed armed movement as the authority governing its southern neighbour, which is a major strategic concession for Riyadh.

Houthi rebels have expanded their pressure on Saudi Arabia and made fresh territorial gains inside Yemen. The group has also pushed closer to Aden, the southern port city that serves as the seat of Yemen's internationally recognised government, which is backed by Saudi Arabia.

WHY THE HOUTHIS ARE ASKING FOR USD 51 BILLION People briefed on the discussions said that the Houthis described the USD 51 billion as compensation for years of Saudi airstrikes and the long-running blockade imposed during the conflict.

For Riyadh, however, the demand may not be the most difficult part. Recognising the Houthis as Yemen's rulers would fundamentally alter the balance of power along Saudi Arabia's southern border. The kingdom would effectively be accepting an armed group with close ties to Iran as the dominant authority in Yemen. That is precisely the outcome Saudi Arabia has sought to avoid.

The current crisis is rooted in Yemen's civil war, which drew Saudi Arabia directly into the conflict in 2015 when Riyadh intervened against the advancing Houthi movement. What began as an attempt to support Yemen's internationally recognised government turned into a prolonged and costly confrontation.

The conflict later entered a period of relative calm, but the latest escalation has brought the threat back to Saudi territory.

HOUTHIS PUSH CLOSER TO ADEN The battlefield has also changed. The Houthis have seized additional strategic territory and are now pressing towards Aden. Their forces have moved to within roughly 50 miles of the city, bringing them closer than at any point since the early stages of the war.

Aden is not just another Yemeni city. It is the main seat of the internationally recognised government that Saudi Arabia supports. A Houthi advance towards the city would therefore carry both military and political significance. It could put greater pressure on the Yemeni government and potentially force Riyadh to decide whether it is prepared to commit more resources to prevent further territorial losses.

The problem is that neither option is attractive. Saudi Arabia can continue its air campaign, but airstrikes alone have not been enough to push the Houthis back. Sending substantial ground forces could produce heavy casualties and expose the Saudi leadership to political pressure at home.

"The imbalance of risk between the Houthis and Saudi Arabia is even greater now than it was in the earlier period of conflict between 2015 and 2022, as the impact of the strikes on civilian and energy infrastructure undermines investor confidence," Kristian Coates Ulrichsen, an expert at Rice University's Baker Institute, told the WSJ.

SAUDI AIRPORTS AND OIL FACILITIES UNDER ATTACK The threat is no longer confined to remote areas of Yemen or Saudi Arabia's southern border. Houthi attacks have increasingly targeted infrastructure that is crucial to the kingdom's economy and international connectivity.

In October, the group carried out a near-daily campaign against Saudi Arabia, with attacks intensifying towards the end of the month. The targets included civilian airports, disrupting air travel, as well as facilities linked to Saudi oil giant Saudi Aramco. Fires and damage were reported at some installations.

The aviation disruption has been particularly damaging. Thousands of flights at Riyadh's King Khalid International Airport were cancelled during October after repeated Houthi attacks.

The attacks also raise a wider concern for Riyadh: Saudi Arabia is trying to project itself as a stable destination for investment, tourism and major international events. Repeated strikes on airports and energy infrastructure threaten that image.

Saudi Arabia has responded with repeated airstrikes against Houthi positions. But analysts say that approach has a fundamental limitation. The Houthis have also been striking potential staging areas and command centres that could be used by Saudi-backed forces for a ground offensive. One such attack in Yemen's Shabwah governorate reportedly killed at least 75 people and wounded more than 200, according to the WSJ. It was described as the deadliest attack since the civil war reignited.

SAUDI ARABIA HAS FEW ALLIES READY TO FIGHT Riyadh's options are further complicated by the limited willingness of its allies to enter another major Yemen campaign. The United Arab Emirates, once Saudi Arabia's principal outside partner in Yemen, withdrew from the anti-Houthi campaign last December after relations between Riyadh and Abu Dhabi deteriorated.

The two countries also have different interests in Yemen. The UAE has supported forces seeking an independent South Yemen, while Saudi Arabia has generally backed the preservation of a united Yemeni state. Tensions escalated further after Saudi Arabia bombed what it described as a weapons shipment intended for UAE-backed forces.

Riyadh has since looked towards its new Mecca Pact with Turkey and Pakistan, which includes a commitment that an attack on one member would be treated as an attack on all. But the arrangement has not yet translated into a ready-made military coalition against the Houthis.

Turkey's parliament has yet to approve the pact, while Pakistan has declined to participate in offensive strikes inside Yemen.

Egypt has offered another possible avenue. Its parliament approved military support for Saudi Arabia in October, but President Abdel Fattah El-Sisi has stressed that any Egyptian role would be defensive.

The US, meanwhile, has so far declined to provide direct support for a new Saudi campaign against the Houthis after its own weeks-long confrontation with the group in 2025. The possibility of a wider regional confrontation makes Riyadh's calculation even harder. If the US or Israel launches another major attack against Iran, Gulf states could face retaliatory strikes from Iranian-backed groups, potentially including the Houthis.

THE BIGGEST RISK FOR RIYADH MAY BE THE PRECEDENT For Saudi Arabia, therefore, the USD 51 billion demand is only one part of the problem. Maged Al-Madhaji, a Yemeni analyst, warned that agreeing to the financial demand could create a dangerous precedent.

"The bigger problem is establishing a precedent whereby the group can escalate militarily whenever it wants additional concessions or money," he told the WSJ. That is the calculation facing Riyadh now.

Paying the Houthis could potentially reduce the immediate threat to Saudi territory, but it could also signal that military pressure works. Refusing to negotiate could prolong attacks on airports and oil facilities. Escalating the war could require Saudi Arabia to commit ground forces without reliable allies and risk another costly campaign in Yemen.