What are the potential implications of Houthi attacks?

Given reports of Houthi threats to close the Bab el-Mandeb passage to the Red Sea and to attack Saudi oil infrastructure, we are publishing an updated version of this note originally sent on 31st March.

Attacks on Saudi oil infrastructure and/or the effective closure of the Bab el-Mandeb Strait would push us closer to our adverse scenario in which global growth slows sharply enough to meet most definitions of a global recession. While there would be a direct hit to Asian economies that rely heavily on oil imports from Saudi Arabia, the bigger threat to the world economy would come through higher oil prices.