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Source: Bloomberg

While lacking the scientific infrastructure necessary for a full-blown chemical weapons program, the Houthis could still renew their threat to Red Sea shipping.

Yemen's Iran-backed Houthis have dominated headlines since November 2023, when they launched a major offensive on international maritime traffic in the Red Sea and on Israeli territory. However, the group may be going through another alarming evolution.

In September, Yemeni minister of information Moammar Eryani accused the Houthis of manufacturing chemical weapons from components smuggled from Iran. He claimed that the rebels had "secret laboratories" where they were producing and testing toxic, chemical, and biological agents that they intended to mount on ballistic missiles and drones.

The accusation followed reports from weeks earlier that Yemeni government forces had seized a 750-ton weapon shipment from Iran that included both chemical and conventional weapons camouflaged as generators, electrical transformers, air pumps, and hydraulic columns. At this time, the content of that seizure and the intended use of the chemical weapons have not been confirmed by international actors or unbiased sources.

While the Houthis themselves have never before employed chemical weapons, their use in terror attacks has precedent, particularly in the Middle East. While much attention has been dedicated to the Syrian and Iraqi governments' use of chemical weapons, even non-state actor groups in the region have been able to develop and deploy this form of warfare in the past. Sunni jihadist groups, such as the Islamic State (ISIS), have a history of employing this type of weaponry. In 2015, the group made an evolutionary leap when they armed a projectile delivery system with chemical warfare agents.

But what could a Houthi chemical weapon strategy look like?

The group will need to build its chemical weapons program around two very important factors: technical expertise and availability of components. Given Yemen's porous borders, extensive smuggling networks, and Iran's demonstrated willingness to supply unconventional capabilities, the most likely path for the Houthis to find components would be to acquire bulk dual‑use chemical precursors (common industrial or agricultural chemicals that can also be repurposed to produce toxic agents) or ready-made toxic munitions from external suppliers.

Then the group would likely adapt its existing technologies, like drones and missiles, to carry the toxic chemical components. While that would require overcoming significant technical, safety, and logistical hurdles, those barriers could be substantially lowered by external suppliers, technical assistance, and the group's existing delivery infrastructure.

Executing a large-scale chemical weapon strategy, including one that could potentially continue to upend maritime traffic, will not be something the Houthis can accomplish overnight. Producing, stabilizing, and effectively dispersing toxic agents is technically demanding and risky for the user. Looking at past examples, it was not until ISIS established its territorial caliphate in 2014—giving it access to laboratory equipment, secure labs, and precursor chemicals—that it was able to develop chemical weapons capability.

While the Houthis have an unchallenged territorial base that would allow them to establish these labs, the Yemeni government never had the industrial base or scientific infrastructure for the group to "piggyback" off of. However, Iran, which has a history of sending technical trainers to the Houthis, began developing a chemical weapons program decades ago during the Iran-Iraq war.

Recognizing these challenges, it is likely that the Houthis' first foray into chemical warfare would be characterized by small-scale attacks that utilize crude delivery mechanisms such as canisters of chemicals or roadside, water-borne, or vehicle-borne improvised explosive devices (IEDs). But these smaller-scale attacks can still have a huge impact. Even a limited release of toxic industrial chemicals or improvised agents—substances that are often legitimately traded for agriculture, manufacturing, or medical use—could cause panic and civilian casualties. Moreover, the group's willingness to strike commercial shipping and port infrastructure could add a dangerous dimension.

Using even a crude chemical weapon on a merchant ship or port—which are crowded, difficult to secure, and often operate under commercial rules of engagement—could pose risks for the crew and dockworkers while also forcing prolonged closures, mass evacuations, and multilateral rescue and decontamination operations. All of these could lead to higher insurance costs, rerouted shipping lanes, disrupted aid flows, and temporary shutdowns of chokepoints, all causing lasting disruptions to global supply chains. Attribution at sea is also more difficult, making deterrence and rapid diplomatic response complicated.

In response to the Houthis' rumored chemical weapons development, the international community needs to push the United Nations and the Organization for the Prohibition of Chemical Weapons (OPCW) to investigate such allegations and use diplomatic pressure to push for increased accountability from the Houthis.

Simultaneously, the United States and allied navies active in the region need to strengthen interdiction of suspected weapons shipments through coordinated maritime patrols and port inspections, expand intelligence sharing among states and commercial operators, and increase naval escorting and monitoring of vulnerable convoys. Moreover, they need to prioritize broadening medical readiness in Yemen and neighboring states, stockpile appropriate protective equipment and countermeasures, and train first responders and maritime crews in the management of chemical incidents.

The possibility that the Houthis are moving toward chemical capabilities—and the additional risk those capabilities pose to maritime commerce and coastal populations—is a red flag that deserves urgent and focused attention. The path from smuggled dual‑use components to effective chemical warfare will be difficult. Yet, even small-scale incidents could have devastating impacts on Yemen's vulnerable population, US regional allies, and international shipping.

Source: The National Interest

Source: investing

Source: cnbc

Source: Theguardian

The dollar regained ground against the yen, recovering from Monday's selloff, even as expectations for a December rate hike by the Bank of Japan lingered, while the euro edged up after data on Tuesday showed euro zone inflation was slightly hotter-than-expected.

The greenback rose 0.3% against the yen to 156.00, after hitting a two-week low on Monday, following a sale of 10-year Japanese government bonds which saw the strongest demand since September.

"The auction result appears to have provided a measure of reassurance to the market," said Shoki Omori, chief desk strategist at Mizuho in Tokyo.

Stocks, bonds, cryptocurrencies and the dollar all tumbled on Monday after Bank of Japan Governor Kazuo Ueda said that the central bank would consider the "pros and cons" of raising interest rates at its next policy meeting, sending Japanese two-year yields above 1% for the first time since 2008 and prompting a spillover into global bond markets.

"We're basically back to where we started before Ueda's remarks yesterday, which is maybe a bit perplexing considering that swaps still price about an 80% chance of a Dec hike," said Michael Brown, senior research strategist at Pepperstone.

"To me it speaks to everything still being very much USD-driven, with the pressure on the buck seen yesterday amid increasing expectations that (Kevin) Hassett will get the Fed Chair gig having given way to slightly more rational conditions today, as participants re-focus on what remains a solid U.S. growth outlook, even with a 25-basis-point Fed cut next week very much on the cards," he said.

Data on Monday showed weaker-than-expected manufacturing data from the U.S., heaping pressure on the Federal Reserve to cut interest rates this month.

Fed funds futures are pricing an 87% probability of a 25-basis-point cut at the Fed's next meeting on December 10, compared with a 63% chance a month ago, according to the CME Group's FedWatch tool.

The euro was 0.1% higher at $1.16200 after data showed inflation in the 20 nations sharing the euro accelerated to 2.2% last month from 2.1% in October, a small rise that is unlikely to be too concerning for the European Central Bank.

Inflation in the euro zone is practically at the ECB's 2% target, ECB policymaker Joachim Nagel said in an interview published on Tuesday.

"This (inflation data) comes at a time where some had claimed we could yet see another cut from the ECB, although the likeliness is that their easing cycle is over," said Joshua Mahony, chief market analyst at Scope Markets.

Sterling edged 0.1% lower to $1.3207 , having touched its highest level in a month on Monday.

The Bank of England cut the amount of capital it estimates lenders need to hold in a bid to boost lending and stimulate the economy in the first reduction to bank capital requirements since the financial crisis.

Leading cryptocurrency bitcoin rose 2% to $88,255, pulling away from the 10-day low touched in the previous session.

Source: Kitco