Yemen to Resume Oil Exports, Paving Way for Economic Renewal

Rashad al‑Alimi, head of Yemen’s Presidential Leadership Council, announced on July 20 that oil exports will resume after a pause that began in late 2022, sparking optimism that the nation’s primary foreign‑currency source will be restored. The government, grappling with economic difficulties and Houthi‑controlled northwest, requires this revenue and has committed to using it for salary payments, service improvements, and broader economic stability.

Nevertheless, restarting oil exports will depend on more than political decisions; it will require a secure environment capable of protecting facilities, pipelines, and ports, and will need to restore confidence among shipping firms, insurers, and international buyers.

The export test

Yemen possesses proven oil reserves of roughly three billion barrels, mainly in the Masila, Marib and Shabwa basins. Although the U.S. Energy Information Administration notes that the country retains adequate resources for production and export, security conditions impede extraction and transportation.

Production peaked at about 439,000 bpd early in the millennium, but has since fallen due to depletion of mature fields and, more sharply, the war that began in 2014 and attacks on oil infrastructure. The IMF reports that output settled at roughly 19,000 bpd in 2024.

S&P Global estimated that, after the export suspension, production remained between 7,000 and 10,000 bpd in 2023 and 2024, most of which was consumed domestically.

Minister of Oil and Minerals Mohammed Bamqaa said export proceeds will be deposited in the Central Bank to strengthen state finances, noting that more than 1.7 million barrels of oil are currently stockpiled for export.

He added that initial production is expected to reach about 60,000 bpd. The ministry has tasked oil companies with creating timelines to boost output and develop fields, aiming to increase capacity by up to 25 % in the first month after exports resume.

Professor of financial economics at Hadramout University, Mohammed al‑Kasadi, told Al Jazeera that, although he anticipated production would reach the 60,000 bpd figure cited by Bamqaa, the actual exportable volume is likely lower. Domestic consumption of roughly 20,000 bpd for refinery and power‑plant operations reduces the exportable amount to approximately 40,000 bpd.

Yemeni affairs expert Hassan Mohammed Moghalis told Al Jazeera that many fields under government control remain operable. The Masila fields in Hadramout and the al‑Uqla fields in Shabwa are among the most viable and form the foundation for any expected resumption. He noted that crude oil can be moved via pipelines to ports on the Arabian Sea.

Market confidence

Although restarting production is crucial, experts warn that greater challenges lie ahead once oil reaches Yemen’s ports. Houthi attacks on export terminals in Hadramout and Shabwa in late 2022 made shipping firms and insurers more hesitant to handle Yemeni crude, driving up insurance costs and discouraging buyers from contracting.

The Houthis have tied the export resumption to receiving a share of the revenue to fund public‑sector salaries.

Al‑Kasadi of Hadramout University says that successfully moving oil to the port does not ensure export success. Shipping companies and insurers mainly evaluate security risks and the chance of renewed attacks on ports or tankers, a concern heightened by Houthi strikes on shipments linked to Saudi Arabia, a key supporter of the Yemeni government.

He added that the oil market depends on trust and stability, so any export operation must convince buyers that shipments will leave safely and that the activity will not be abruptly interrupted.

Moghalis believes that military protection of ports and pipelines is essential but not sufficient; restoring confidence among insurers and international buyers is also critical, since oil reaches markets through a network of transport, financing and insurance.

He warned that any new attack on the ports, even one causing minimal material damage, could set the sector back to square one, given shipping companies’ heightened sensitivity to conflict‑zone risks.

Al‑Kasadi emphasized that export resumption is vital, noting that the export halt evolved into a broader financial crisis. Loss of this key foreign‑currency source depressed the Yemeni rial’s exchange rate and hampered the state’s capacity to fund essential services.

Economic pressure

Despite the significance of resuming exports, expert Abdul Karim al‑Ansi cautioned against overstating its immediate economic impact.

He told Al Jazeera that export resumption will certainly provide a vital source of foreign currency and give the Central Bank more flexibility to support monetary stability. However, it alone cannot resolve the economic crisis, given broader challenges such as the divide between government‑ and Houthi‑controlled territories, weak non‑oil revenues, and declining overall economic activity.

Al‑Ansi added that the benefit Yemenis receive from oil revenues will ultimately depend on how funds are managed and whether the government channels them into salaries and basic services, rather than merely on export volumes.

While successful initial shipments could boost market and investor sentiment, al‑Ansi stressed that the real test is sustaining exports. Yemen’s economy requires a steady flow of foreign currency, not sporadic shipments that cease whenever security worsens.

The export suspension not only deprived the government of its primary revenue source but also intensified pressure on the foreign‑exchange market. With dwindling dollar inflows from oil sales, demand for foreign currency has remained high to finance essential imports such as food, fuel and medicine, leading to a weakened rial and rising inflation.

These pressures are compounded by the monetary split between the Central Bank in Aden and the Houthis in Sanaa, which has created two separate financial systems and exchange rates, complicating monetary policy and limiting coordinated use of oil revenues to stabilise the economy.

Al‑Kasadi noted that recent Saudi financial support has helped curb currency volatility in government‑controlled areas, but he stressed that this aid cannot replace a steady, sustainable flow of oil revenues, which require a period of stability that may be hard to achieve if the conflict escalates further.

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