Yemen's government forces pull back from Bab el-Mandeb, handing the Houthis the strait's mouth

Saudi-backed Yemeni forces are retreating from the Bab el-Mandeb Strait, the narrow gate at the southern end of the Red Sea, in what Reuters called a major setback in the war against the Iran-aligned Houthis. CNBC carried the Reuters report on Sunday, and the Financial Times also ran the story (we read only its headline). The announcement came from the government side. At the time of the report the Houthis and Saudi Arabia had not responded.

What the statement says

The Southern Armed Forces, described by Reuters as the main military force fighting for Yemen's government in the south, said it is carrying out "a redeployment operation" from Dhubab Airport and the Bab el-Mandeb area, west of Taiz Governorate. It gave its reason as "the priority of securing the capital, Aden, and the neighboring governorates." Aden is the temporary capital of the internationally recognized government.

Reuters says this appears to end a six-week government counteroffensive. That offensive retook key positions around the strait last month but did not push the Houthis out entirely or retake the coastal city of al-Mocha. The Houthis took the Red Sea coast and the strait's approaches in rapid gains in September, per the same report. Yemeni military sources told Reuters the forces had pulled back to al-Suqyah, about 95 miles (150 km) west of Aden, while still trying to clear nearby coastal areas. In the highlands, the Houthis are positioned just outside the Tur al-Bahah district, about 50 miles (80 km) from Taiz, which they have besieged. Reuters says aid cannot reach Taiz, civilians cannot leave, and the city hosts about half of the 300,000 people displaced across Yemen by the latest fighting.

The other front the same day

The retreat landed on the same day Iran said it fired six drones at a US air defense radar site in Bahrain. Bahrain's military said it intercepted and destroyed the attacks, the BBC reports, and the US military has denied an earlier Iranian claim of a hit there. Reuters notes that since the Houthi gains the group has stepped up drone and missile attacks on Saudi Arabia, including strikes that grounded flights at its main airports, and has targeted energy facilities. Our earlier coverage: the Houthi claim on a Saudi pipeline station and Yanbu, which Saudi Arabia had not confirmed.

What it means for markets

Figures below are Friday, Nov. 13 closes from Yahoo Finance, read this morning. US markets reopen Monday, so the retreat is not yet priced.

Oil. Brent is 19.0% below its March 31 peak on our chart. Reuters describes the strait as part of a key oil route and, in the same report, says Gulf crude has been flowing out near pre-war levels, with attacks on ships a daily hazard that keeps prices elevated. We have no verified figure for how much oil or product passes Bab el-Mandeb today and will not guess one. Shipping and insurance. A government retreat does not by itself close the strait; what matters is whether Houthi attacks on vessels follow, and we have seen no such report today. War-risk premiums are set by underwriters, and we have no verified rate to quote. Airlines and airspace. Reuters says Houthi strikes have already grounded flights at Saudi airports; watch for new notices. Defense. ITA is down from $73.24 on Wednesday. Consumers. Pump prices follow crude with a lag.

Watch next: a Houthi statement or claim over the strait, a Saudi response, and whether the Aden front holds. More: today's War Room brief, crude oil chart, War Room.

Sources: CNBC (Reuters report), BBC, Reuters and Financial Times headlines (not read in full), Yahoo Finance. Claims are attributed to the parties that made them. This is market information, not investment advice.