Somaliland, Socotra, and The Price of Oil

Image: Dragon’s Blood Tree on the Yemeni Island of Socotra.

Our new interactive map places events and trends mentioned in the Red Sea Brief, Legal Letter and Fragility Tracker. Map features will be updated in coming issues.

This copy has been revised and updated through July 8 2026, including: The interim US–Iran deal that reopened the Strait of Hormuz appears to have collapsed today, after new US airstrikes on Iran, a revoked waiver on Iranian crude sales, and Iranian attacks on shipping inside the strait. All have pushed oil prices back up. At the same time, the worst ground fighting in years broke out around Hodeidah on Yemen’s Red Sea coast.

Subscribe now

The Week In Brief:

● Three governments shifted political alignments around Bab al-Mandeb strait in the last week+: On June 15 Somaliland’s president signed a joint declaration with Israel’s PM in Jerusalem covering trade, security, and an exchange of embassies. This was the first bilateral agreement since Israel recognized the breakaway republic in December 2025 (Somaliland’s opposition Kaah party has since said it backs recognition but opposes siting the embassy in Jerusalem). On Yemen’s coast, Saudi-backed Yemeni forces closed the Southern Transitional Council (STC)’s Aden headquarters two weeks ago, froze its accounts, and sought UN sanctions on its leader (the STC claims to have reoccupied it within a day). And Egypt and Eritrea agreed to jointly control Red Sea security and develop Eritrean ports, a bloc aimed at landlocked Ethiopia’s push for sea access.

● Brent crude fell to about $72 a barrel, but has since reversed. On 5 July, OPEC+ agreed to raise August output again, and Saudi Aramco cut its August crude price for Asia to a level it offered during the price wars of 2015 and 2020 — pointing to a coming glut. But as the US–Iran ceasefire collapsed this week, Brent jumped roughly 5 percent, back toward $78 on 8 July, after fresh US airstrikes on Iran and a revoked waiver on Iranian crude sales. The whipsaw does not fix the underlying problem: below the $78–85 Saudi Arabia needs to balance its budget, the kingdom is in deficit, reducing the money available for its NEOM project on the Red Sea coast, from which it is already pulling back.

● On July 5 a cargo ship was fired upon about 30 nautical miles off Houthi-held Hodeidah on Yemen’s Red Sea coast; armed attackers boarded a separate vessel near Balhaf farther east. These were the first small-boat attacks close to Yemen since the Houthis paused their shipping campaign — and they came as the worst ground fighting in years erupted south of Hodeidah, where a Houthi assault beginning late on 3 July killed 16 government troops before a counterattack that the government says killed more than 50 Houthis.

● In Sudan, the UN human rights chief called a “red alert” over the besieged city of El Obeid on July 3, and the UN Human Rights Council opened an inquiry into abuses there on July 6. The Rapid Support Forces control every route out except the road east; the city has been without power for nearly a month, but the feared ground assault had still not begun as of July 8.

● An Iranian drone struck a ship inside the strait on June 25, and this week the interim deal began to unravel — fresh US strikes on Iran, a revoked oil-sale waiver, and Iranian attacks on a Qatari LNG carrier and a Saudi tanker in the strait. Iran has rejected any foreign role in clearing the mines it agreed to remove, and a master mariner in our network warns those mines are not yet cleared.

Somaliland, Socotra, and the Saudi–Emirati Divergence

On Yemen’s coast, the Saudi–Emirati contest over southern Yemen moved into the open. On June 14 a Saudi envoy ordered the closure of the Emirati-backed Southern Transitional Council’s (STC) headquarters in Aden; the Aden attorney general then froze the council’s accounts, and Yemen’s internationally recognized government asked the UN Security Council to add the council’s leader, Aidarous al-Zubaidi, to its sanctions list. On 21 June the Southern Transitional Council — which Yemen’s leadership had dissolved in January — threatened “painful escalatory measures” against Saudi Arabia.

The question of Southern sovereignty escalated as Socotra’s governor, Raafat al-Thaqali, claimed publicly that “Socotra is not land owned by Yemen,” noting that the archipelago sits about 240 kilometers from Somalia, versus 380 kilometers from the Yemeni mainland. A sitting Yemeni official disputing his own state’s title to a strategic Indian Ocean island is significant; the legal steps now being taken against the council are covered in the forthcoming Legal Letter (also accessible in the coming days via our website, www.redseafutures.com/legal).

On the Horn of Africa side, Somaliland moved the other way, toward Israel. On 15 June Somaliland’s president, Abdirahman Mohamed Abdullahi, a.k.a. “Irro”, signed a joint declaration with Israel’s prime minister in Jerusalem and agreed to open an embassy there — the first bilateral agreement to follow Israel’s December 2025 recognition of the breakaway republic, still the only recognition by a UN member state. The Arab League and the Organisation of Islamic Cooperation called that recognition “invalid and illegal.” Even inside Somaliland the Jerusalem venue is contested: the opposition Kaah party said this month it supports the tie to Israel but not an embassy in the disputed city.

Small Boats Return Off Yemen

On the morning of July 5 a cargo ship reported it was under attack by “unknown armed assailants” about 30 nautical miles southwest of Hodeidah, the main Houthi-held port [see map]. According to the UK Maritime Trade Operations center, a skiff approached a bulk carrier and opened fire; the ship’s armed guards returned fire, and the skiff withdrew to a larger vessel two nautical miles off with its tracking transponder switched off. Crew and ship were reported safe. No group claimed responsibility for the attack. Days earlier, armed men boarded a vessel near Balhaf, farther east in the Gulf of Aden, damaged the bridge, and left after the crew locked themselves in the citadel; UK authorities later reclassified that case as an illegal boarding see [map].

These were the first small-boat attacks close to Yemen since the Houthis paused their shipping campaign, and it is not yet clear who carried them out. They also came as the fighting ashore worsened sharply. Beginning late on 3 July, Houthi forces launched their heaviest assault in years on internationally recognized government positions south of Hodeidah, near Jabal Dabbas in the Hays district [see map]; snipers, drones, and mortars killed 16 government troops before a counterattack the government says killed more than 50 Houthi fighters. It was the most violent clash since the 2022 truce, and it puts the July 5 sea attack in a harder context. The water off Hodeidah has long been under firm Houthi control, which makes for-profit piracy there unlikely and points to the Houthis or an allied group; attacks farther east in the Gulf of Aden have instead revived concern about Somali-style piracy exploiting the security vacuum. The distinction matters to owners and charterers, because a Houthi-linked attack near Hodeidah and an opportunistic boarding off Balhaf carry different insurance and routing consequences. Separately, the Houthi ban on Israeli-linked ships, declared on June 8, remains in force regardless of the Hormuz turmoil; its charter-party consequences are covered in the Legal Letter.

Oil: A Fall, Then a War-Risk Snapback

The interim US–Iran deal that reopened Hormuz first pulled Saudi crude back toward the Gulf: on 26 June Aramco resumed loadings at Ras Tanura after a roughly four-month halt, ending the wartime diversion of Saudi exports to the Red Sea port of Yanbu, and Brent fell to around $72 a barrel. On 5 July, OPEC+ agreed to raise August output by another 188,000 barrels a day, and Saudi Arabia cut the price of its main Arab Light grade to Asia by $11 a barrel, to a $1.50 discount against the regional benchmark — a discount the kingdom last offered during the price wars of 2015 and 2020. Saudi exports are back near 90 percent of their pre-war level.

Then the direction flipped. As the ceasefire frayed this week — fresh US airstrikes on Iran, a revoked waiver that had let Iran sell crude, and Iranian attacks on shipping inside Hormuz — Brent jumped about 5 percent, back toward $78 on 8 July, on renewed fear of supply disruption. The bounce is a war premium, not a change in the fundamentals: it still leaves Brent around the roughly $78–85 the kingdom needs to balance its budget, and it does nothing for the glut that OPEC+ output and Aramco’s discounting still point toward later in the year. Michael Brill and others in our network have tied the structural weakness to a 2027 supply glut; a war spike can mask that for a few weeks, but not undo it. The budget is in deficit, tightening the finances behind Saudi Arabia’s retreat from the NEOM project on the Red Sea coast. The forthcoming Fragility Tracker examines the effect on Saudi finances.

A Faulty Reopening

The Hormuz reopening, shaky last week, began to come apart. The June 17 memorandum reopened the strait “toll-free” for 60 days and committed Iran to clear mines, but an Iranian drone had already struck the container ship Ever Lovely inside the strait on 25 June [see map]. This week the deal frayed further: the United States carried out fresh airstrikes on Iran and revoked the waiver that had let Iran sell crude on world markets, and Iran struck back at shipping, with reported attacks on a Qatari LNG carrier and a Saudi oil tanker in the strait [see map] and a claim that it had targeted 85 US military sites in Bahrain and Kuwait. Iran has also rejected any outside role in clearing the mines: its deputy foreign minister, Kazem Gharibabadi, said mine clearance would be carried out “only by Iran” as the coastal state — even as the Pentagon estimates full minesweeping could take up to six months. Pressuring the arrangement from every side works against the Iran–Oman negotiation meant to settle how the strait is run. Ship traffic had been recovering; this week’s escalation puts that recovery, and the legal underpinnings, back in question.

Two of our contributors sharpened the picture, and this week’s events only strengthen their read. Captain Roy Facey, a master mariner, passed on the assessment of a retired Kuwait Oil Tanker Company captain now in Abu Dhabi, who put the working reality plainly: he would not take a ship through the strait’s central traffic-separation lane without confirmation from a trusted external navy — British, American, or an EU force involved in the mine clearance. The captain added that Iranian forces have attacked vessels inside Omani and other Gulf states’ territorial waters, not only in the disputed lane — a warning borne out by the vessel attacks reported this week. See the Legal Letter for more details. On the deal’s fragility, Dr. Birol Baskan sees Pakistan’s failed mediation as a ceiling rather than a stumble: Islamabad “can open channels, but it cannot offer the kind of strategic, economic, or security gain that would make both sides accept and uphold a durable arrangement,” and the same, he argued, holds for Turkey and every other regional broker — no Gulf order holds without a United States guarantee. With Washington now striking Iran again rather than guaranteeing the deal, that guarantee looks further off, not nearer.

Sudan: A “Red Alert,” No Ground Assault Yet

The most severe humanitarian situation in the basin remained in Sudan. The Rapid Support Forces, the paramilitary fighting the Sudanese army, kept El Obeid — the North Kordofan capital and the last major government-held city on the road to Khartoum — under a siege of drone strikes on its power station, fuel depots, and water supply see map; the city has now been without electricity for nearly a month. On 3 July the UN human rights chief, Volker Türk, issued a “red alert” at an urgent session of the Human Rights Council in Geneva, warning that signs pointing to a mass-atrocity assault were “clear and unmistakable” and invoking the RSF’s massacre at El Fasher last October as the precedent. On 6 July the council adopted a resolution opening an inquiry into abuses around the city, with China disassociating itself. The RSF still controls every route out of the city except the road east. The ground assault the warnings anticipate had not begun as of July 8. The Fragility Tracker covers the financing shortfall and what our network says fails first in a siege like this.

The Horn: A Littoral Bloc And A Widening Vacuum

To the west, Egypt and Eritrea hardened an alliance aimed at Ethiopia. Following President Isaias Afwerki’s early-June visit to Cairo, the two governments declared Red Sea security the “exclusive responsibility” of the basin’s littoral states and agreed programs in port modernization and fisheries — a doctrine pointed at landlocked Ethiopia, whose push for sovereign sea access at the Eritrean port of Assab remains the main land-side flashpoint. Farther south the vacuum widened: Somali piracy is at its most active since 2011, with the UK Maritime Trade Operations center holding its regional threat assessment at “severe,” and the African Union’s stabilization mission in Somalia faces a funding cliff. A resurgence of piracy feeds straight back into Gulf of Aden and Bab al-Mandeb war-risk pricing.

What to watch

● Will Hodeidah ground fighting spread? Will any party claim the July 5 sea attack, and will it happen again? — and will a confirmed strike on a non-Israeli ship force a Red Sea war-risk reset.

● Will this week’s war premium hold or will the structural glut reassert itself, pulling Brent back below $78 for a sustained stretch?

● Will an RSF ground assault on El Obeid materialize?

● Will a second state follow Israel in recognizing Somaliland? Will Socotra’s governor be removed or summoned to Riyadh?

The Red Sea Brief appears bimonthy for all subscribers. The Fragility Tracker and The Red Sea Legal Letter — this week’s Saudi budget math, the Sudan financing picture, and the charter-party exposure from the reopening — is a paid option. Subscribe at redseafutures.substack.com. For information on Red Sea Futures’ consulting and bespoke reports, visit www.redseafutures.com or write to us on info@redseafutures.com.

Further reading from our network this week.

Ethan Chorin published part 2 of “The Split Hinge: Why an Iran Deal (Still) Runs Through Abu Dhabi and Riyadh”, in The Middle East—Told Slant, “War Has Strengthened The Case for The IMEC,” arguing that naysayers notwithstanding, the India-Middle East-Europe Corridor is more critical to regional peace architecture than ever.

Nasser Bin Nasser was keynote speaker at the regional launch of a report by Johns Hopkins Center for Humanitarian Health–Lancet Commission on Health, Conflict, and Forced Displacement in Amman, Jordan last week. The report, titled “Health in a World of Crises and Impunity,” calls for an urgent transformation of the global humanitarian system. It can be found at the following link: https://lnkd.in/eGspt3qV

Red Sea Futures Contributors to this issue:

Birol Baskan — Political scientist specialising in Middle East and Turkish foreign policy and Gulf geopolitics. A former professor at Georgetown University in Qatar and non-resident scholar at the Middle East Institute, he writes widely on regional powers and mediation. He is the author of books on Turkey, Iran, and religion-state relations, and works as an independent scholar based in Ankara.

Michael Brill — Middle East political analyst and Ph.D. candidate in Near Eastern Studies at Princeton, where his dissertation examines Baʿth Party founder Michel ʿAflaq. Visiting Scholar at Smith College; 2024–25 Wilson Center Global Fellow and Air Force Academy Non-Resident Fellow. M.A., Georgetown. Published in Foreign Affairs and War on the Rocks.

Guilain Denoeux — Professor of government at Colby College and a specialist on political development, informal networks, and governance in the Arab world. He has advised USAID and other agencies on fragility and conflict, and co-authored, with Robert Springborg, work on aid effectiveness. His research traces how urban social networks mobilize under authoritarian pressure, including in Sudan.

Roy Facey — Master mariner and maritime consultant with decades at sea and ashore in tanker operations and shipmaster training, including work with Kuwait Oil Tanker Company crews. He advises on navigation risk, safe transit, and crew safety in the Gulf and Red Sea, and contributes practitioner assessments drawn from a working network of serving and retired ship captains.

Romaric Jannel — Philosopher specialising in ethics, AI, and comparative philosophy, with research on trust, responsibility, and agency. Program Director at the Collège International de Philosophie in Paris and Visiting Researcher at Ritsumeikan University, Japan. Ph.D. from EPHE–PSL University. He writes the Philosophy And Beyond Substack.

Sarah Deardorff Miller — Expert on refugee, migration, and humanitarian issues. Doctorate in international relations from Oxford; teaches displacement and humanitarian response at Georgetown. Senior fellow at Refugees International, with much of her research on the Horn of Africa. Author of books and reports on the politics of forced migration and how displacement responses are financed.

Robert Springborg — Authority on the political economy of Egypt and the MENA region. Research Fellow at the Italian Institute of International Affairs; former MBI Al Jaber Chair at SOAS and Director of the American Research Center in Egypt. Has consulted for USAID, State, and UNDP. Author of numerous books, including the recent Making Aid Work, with Guilain Denoeux and Hicham Alaoui.

Patrick Theros — US Ambassador to Qatar (1995–1998) and a career Foreign Service officer for 36 years, with senior postings in Abu Dhabi, Amman, and Damascus and as political adviser to Central Command. Now a strategic adviser at the Gulf International Forum in Washington, he writes and consults on Gulf security, energy, and US–Gulf relations, drawing on long-standing ties in Doha.