April 11, 2019
Iran-backed Houthi militias have orchestrated a fuel crisis in areas under their control with the intention of using the shortage as a trump card against the Central Bank of Yemen to overturn its decision to crack down on the illegal purchase of Iranian oil derivatives, one of the main resources funding coup militias.
The decision had the effect of restoring a large part of the cash cycle from the black market to the banking sector and tightened the noose on Houthi financial activity.
Gas stations in Houthi-run strongholds, such as Sanaa, are frantic civilians rushing to stock up on fuel despite them being sold at doubled rates.
Yemeni economist Fares Al-Jadabi said that mid-October 2018 the Yemeni rial exchange rate against the US dollar plummeted to YER 820. The currency crisis, according to Jadabi, was a result of militias taking hold of astronomical amounts of cash from oil trade.
Averaging YER70 -YER90 in revenues per day, Houthis skyrocketed demand for foreign currencies, boosting pressure faced by the CBY as it grapples to balance markets in the war-ridden country.
Illegal trade of Iranian oil is the main source of income for Houthis, according to a January 25 report prepared by a Yemeni panel of experts. The militia monopoly of fuel trade has brought in high profits for the group which managed to successfully monetize Iran-sent oil.
The Yemeni government had hardened its rules and red tape processes regulating oil trade. All ports are required to stop any oil shipment that arrives without the necessary documents. The move threatens to serve a substantial blow to Houthi resources.
Any company looking to bring in oil shipments through Yemeni ports is required to provide bank accounts logging in its trade activity for the last three years, clarifying and confirming the sources of funds and their legitimacy. Insofar, 20 national companies are legally permitted to import oil derivatives into Yemen.