Saudi Arabia Calls Mecca Attack "Red Line"; Houthis Deny Targeting Holy City
The Story
Saudi Arabia's benchmark index finished flat on Wednesday, while most Gulf markets fell as regional risks escalated.
Saudi warplanes struck Yemen, and Iran-backed Houthis launched drones and missiles at Saudi cities. Riyadh said it downed a Houthi drone south of Mecca before it entered restricted airspace, calling the incident a red line. The Houthis denied targeting the holy city, dismissing the claim as propaganda. Mecca is Islam's holiest site and the focal point of the annual Hajj pilgrimage.
US officials met representatives of Yemen's Houthis in Oman over the weekend. This meeting occurred days after the Iran-backed group seized a strategic stretch of the Red Sea coast. The meeting was held at the US Embassy in Muscat, with Oman's government helping to organize it. The Houthis told US officials they had no intention of attacking American vessels and were committed to the 2025 ceasefire with the US.
One Yemeni source stated the group also said they would not attack Israeli ships or any commercial vessels, except those belonging to Saudi Arabia. The Trump administration designated the Houthis a foreign terrorist organization in March 2025. However, Washington has negotiated with them since, reaching a ceasefire in May last year after bombing the group for two months.
President Donald Trump said Saturday that the Houthis had phoned his administration asking the United States to keep out of the Yemen war. Vice President JD Vance said Monday the United States was in direct contact with the group. The incident marks the latest escalation in the conflict in Yemen. Saudi Arabia issued a security alert in Mecca on Tuesday, the first since the Houthis last attempted to target the sacred area with a ballistic missile in 2017.
A Saudi pipeline is reportedly shut down for weeks after a drone attack damaged it. This has led Saudi Arabia to offer additional crude cargoes to Asian refiners through ship-to-ship transfers off Oman's Sohar port. The mounting hostilities threaten to open a second front in the Iran war, with oil and gas prices rising.
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