Yemen's Houthi militants have seized the strategic Red Sea islands of Greater and Lesser Hanish, extending their control over a critical shipping route amid fears of a new global oil crisis. The move follows the group's rapid advance along Yemen's Red Sea coast, including the earlier capture of the port of Mokha and Perim island near the Bab al-Mandab strait, and has left Yemen's Saudi-backed government scrambling to reclaim lost territory while Saudi Arabia faces separate attacks on a key oil pipeline by Iran-allied militants in Iraq.

The islands sit 160km north of the Bab al-Mandab chokepoint connecting the Red Sea to open ocean and Saudi Arabia's Asian export markets, and the Houthi advance now puts fighters just 32km from a US base in Djibouti. Nearly 94,000 Yemenis have been displaced since fighting escalated this month, with over 2,000 fleeing to Djibouti, while analysts warn that the closure of Saudi Arabia's east-west pipeline – which moved 2.6m to 4m barrels a day – could take weeks to repair and push oil prices higher; Brent crude rose to $106.92 a barrel and US diesel prices hit $6 a gallon for the first time.