Global Risk Outlook 2026

Yemen Stability: Power Struggles and Arabian Peninsula Risks

Yemen’s Internal Fragmentation and Regional Risk in 2026

The defeat of Yemen’s UAE-backed Southern Transitional Council (STC) in January 2026 marked one of the most significant shifts in control since the civil war began — and overturned a fragile order that had held for nearly four years.

With renewed fractures between domestic actors and rising friction between regional backers, the country’s fragmentation is once again intensifying – with implications for stability across the Arabian Peninsula and maritime routes beyond.

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What Power Shifts Are Driving Risk in Yemen?

In late 2025, the Southern Transitional Council launched a major offensive, seizing large parts of southern and eastern Yemen. Their control was short-lived. A Saudi-backed counteroffensive retook key areas within weeks and led to the apparent collapse of the STC, a group the UAE had spent years backing and equipping.

These developments exposed growing divergence between the UAE and Saudi Arabia. While Riyadh is prioritising regional de-escalation in line with its Vision 2030 agenda, Abu Dhabi has taken a higher-risk approach, empowering local actors to shape outcomes on the ground.

What Are the Risks for Gulf States as Yemen Fragments?

Yemen’s internal map has changed, but the war is far from over. The Houthis remain the most powerful actor, controlling the majority of the population and large swathes of territory. Their capabilities have continued to grow, despite sustained strikes by the US and Israel throughout 2025.

Any breakdown in the fragile ceasefire raises the risk of cross-border attacks, particularly targeting infrastructure in Saudi Arabia and the UAE. A further resurgence of conflict could also create space for AQAP to re-establish operations, compounding the threat picture across the Arabian Peninsula.

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