Red Sea tensions reach new high as US weighs terrorist designation for Houthis

Israel and Houthis in Yemen have traded fire for the first time, escalating tensions nine months after commercial ships in the Red Sea started to come under threat from the rebel group -- in a waterway the U.S. Navy has been patrolling since the war in Gaza began.

Israel's strike on Yemen's port of Hodeidah on Saturday killed three and injured 87, the Yemeni Ministry of Health said, in a fighter jet assault over 1,000 miles away from Tel Aviv.

Israel says it was a response to a Houthi drone attack Friday that killed one person in Tel Aviv. The exchange of fire was a first for the conflict in the Red Sea, where Houthi attacks had forced an Israeli port to close but had not struck its territory.

The U.S. Navy has been engaged in a firefight with the Houthis since October, hitting Houthi launch sites and batting down incoming drones and ballistic missiles. Tallies of reporting from U.S. Central Command count 14 of these missiles and nearly 60 drones fired by the Houthis and destroyed by the U.S. Navy in June alone, which by some assessments has made the sea combat the United States' most sustained naval fight since World War II.

The U.S., which in January designated the Houthis a Specially Designated Global Terrorist Group, has extended security assurances over the Red Sea -- where their attacks have hit vessels flagged by a variety of nations -- and turned up pressure on the homegrown rebel group to cease its fire.

In an interview with ABC News before the series of attacks over the weekend, U.S. Special Envoy to Yemen Tim Lenderking, the senior U.S. diplomat to Yemen, said a more severe official designation of the Houthis is increasingly under consideration.

"There's more and more talk now about a designation under the [Foreign Terrorist Organization], which will have some tradeoffs, we feel, with our ability to support humanitarian and commercial activity in Yemen," the special envoy told ABC News.

A FTO designation by the State Department, which would level the Houthis with al-Qaeda affiliates and Hamas, could make it more difficult for international humanitarian groups to operate within Yemen by requiring a license to interact with the Houthis, who control key ports including Hodeidah and the capital, Sana'a.

"It's the Houthis that are driving this conversation and making these options on the table that we all thought, months ago, and when Joe Biden first came into office, were not the way to go," Lenderking said.

"But when the Houthis are very clearly behaving and acting like a terrorist organization, it's forcing these questions to the fore," the diplomat said.

Twenty-four million people in Yemen -- 80% of its population -- require humanitarian assistance, with 4.5 million internally displaced. 20 million people are food insecure, according to the International Committee on the Red Cross.

The deputy head of delegation for the ICRC in Yemen, Freya Raddi, told ABC News that the initial January terror designation on the Houthis had "no concrete impact" on the organization's humanitarian work.

"However, it is uncertain whether this will remain the case in the coming months … the ongoing escalation in the Red Sea has caused delays in importing ICRC assistance to Yemen," Raddi said.

"The ICRC is concerned about any additional measures that may have adverse impacts on affected populations and the provision of impartial humanitarian assistance," Raddi said, noting that 90% of Yemen's food is imported and that "counterterrorism measures can create additional administrative and logistical burdens."

"Humanitarian organizations cannot replace the commercial import system," she said.

Israel said it acted alone in its Saturday attack against the Houthis, which it calls a part of Iran's "axis of evil." The Israeli defense minister phoned U.S. Secretary of Defense Lloyd Austin before the attack to inform him, but the Pentagon repeatedly emphasized the U.S. had no role in the Israeli strikes.

The U.S. in January intercepted arms it said were intended for the Houthis from Iran, which just elected a new president, and sanctioned the Houthis' financial networks, but it's not clear whether the Houthis take orders from Tehran or sometimes act "outside of Iranian dictates or recommendations," Lenderking said.

"We don't see any change from the new leadership in Iran yet in any dimension, but certainly not with regard to the Yemen conflict," said Lenderking of new Iranian President Masoud Pezeshkian.

"There is a strong commitment by the Iranians, I think, to continue to support the Houthis," he said.

Regional powers including Iran, Saudi Arabia, and neighboring Oman -- a facilitator in talks between the Houthis and the internationally-recognized government – denounced Israel's aerial attack on the Gulf country's port, which engulfed the port in flames.

Protracted tensions on the Red Sea increasingly threaten a fragile peace within Yemen's borders, where an April 2022 truce froze an eight-year civil war between the Houthis and the former government in Sana'a. The truce has "largely held," Lenderking said, and a U.N.-led "roadmap" in December 2023 brought the Houthis and exiled government to the same table in agreement on a path forward.

Yet there are "very serious questions about what [the Houthis'] commitment is to a peace process in Yemen," Lenderking said.

"They seem far more committed to burnishing their credentials as a member of [Iran's] axis of resistance, and building ties with other terrorist organizations, deepening their ties with Iran. That seems to have been their focus rather than the Yemeni people, which is squarely where we want to see improvement in support made," the envoy said.

The Houthis have said they would cease fire in the Red Sea if a cease-fire is reached in Gaza, which President Joe Biden has repeatedly said is his top priority along with a release of hostages held by Hamas. "He wants that work to continue full steam ahead over the next six months," State Department spokesman Matthew Miller said of Biden Monday.

The president also assembled a coalition of nations to protect mariners and commercial shipping in the Red Sea when the Houthis began deploying drones and missiles.

Lenderking said that the multinational defense arrangement, which includes countries as far as Australia and as near as Bahrain, could be bolstered.

"Of course, the option remains to the United States and the seven allies that participate in this coalition to relook at that," he said.

ABC News' Luis Martinez and Anne Flaherty contributed to this report.