Yemen and Sudan in 2026: Two War Economies, One Red Sea Risk Pool

Two wars, one Red Sea risk perimeter #

The Sudan and Yemen conflicts are usually analyzed in separate buckets, one African and one Arab, one a state collapse and one a frozen civil war. That partition no longer reflects how capital, weapons, and humanitarian flows move. Both conflicts share a single Red Sea operating environment, both depend on Gulf forbearance for currency and fuel, and both were reshaped by the same external shocks since late 2023: the Houthi seizure of the Galaxy Leader on 19 November 2023 and the subsequent commercial shipping campaign, the collapse of Khartoum and the relocation of Sudan's de facto capital to Port Sudan, and the bifurcation of mediation between IGAD and the Saudi-Emirati-American-United Nations Quad, with Doha hosting a stalled August 2024 track.

The combined humanitarian caseload is roughly 49 million people in need, larger than Ukraine, Gaza, and the Sahel quartet combined, astride one of the four highest tonnage maritime chokepoints in the world. UN OCHA's 2026 plans put the Sudan appeal at 4.2 billion dollars and the Yemen appeal at 2.9 billion, against pledged funding of 1.1 billion and 0.9 billion as of mid-April 2026. The funding ratio for both has worsened every year since 2022, and donor fatigue is now a measurable line item in WFP monthly ration cuts. The risk that matters for sovereign creditors and Gulf reconstruction sponsors is the interaction between that shortfall, Red Sea trade disruption, and the failure of post 2023 mediation to produce a financeable peace.

Sudan's war economy and the RSF gold corridor #

Sudan's pre 2023 economy was already fragile, with IMF Article IV reviews flagging fiscal slippage and arrears clearance complications through 2022. The April 2023 outbreak of fighting between the SAF and the RSF destroyed the productive core in roughly eighteen months. The IMF's January 2026 staff visit estimated cumulative real GDP contraction of 36.7 percent across 2023 to 2025, with formal banking in Khartoum reduced to letter of credit processing and most internal commerce collapsing into dollar and gold based barter. The Sudanese pound has depreciated by more than 80 percent on the parallel market since the war began, and consumer price inflation breached 200 percent year on year in the second half of 2025.

The single most important fact about Sudan's war economy is that the RSF controls the artisanal gold sector in Darfur and parts of South Kordofan, while the SAF retains nominal control of the Central Bank of Sudan and the Port Sudan customs perimeter. Reuters and The Sentry have separately documented gold flows of 50 to 75 tonnes per year leaving RSF territory through Chad and South Sudan, transiting to Dubai refiners, and re-emerging in the global supply chain with no Sudanese chain of custody. At a 2026 gold price near 2,400 dollars per ounce, that represents an annualized hard currency rent of 9 to 10 billion dollars, comparable to Sudan's entire pre war goods export book and roughly five times the SAF's current Port Sudan customs revenue.

Hemedti's faction uses this rent to procure weapons, pay fighters in cash, and sustain Sahel political relationships. Burhan's counter rent is narrower: Port Sudan customs, residual oil transit fees from South Sudanese crude moving through the Bashayer terminal, and discretionary Egyptian and Emirati support. The asymmetry is the structural reason the war has not ended. A peace that does not formalize gold sector taxation under a unified authority will not generate the fiscal space to demobilize either force, and the ICC's 2025 expansion of Darfur investigations on top of the al Bashir indictment and the UNAMID transition mandate raises personal exposure enough to suppress face to face mediation.

Agricultural collapse and the wheat reversal #

Sudan was on a trajectory toward wheat self sufficiency as recently as 2019, with Gezira Scheme yields and rainfed sorghum sufficient to cover 70 percent of cereal demand in a normal year. The April 2023 fighting and the disruption of inputs, fuel, and rural labor reversed that trajectory inside two seasons. FAO's 2025 Crop and Food Supply Assessment Mission put cereal production at 4.1 million tonnes for 2024 to 2025, against requirements of 8.0 million tonnes. The 2025 to 2026 winter wheat harvest in Gezira and River Nile states is expected below 350,000 tonnes against a pre war norm of 1.1 million.

The agricultural collapse interacts directly with the RSF gold corridor and the SAF customs base. Imported wheat and fuel transit Port Sudan, and the SAF's residual fiscal capacity depends on customs duties from those flows. RSF disruption of the Khartoum to El Obeid corridor and the looting of agricultural inputs in Gezira in late 2024 raised landed wheat costs in Darfur and Kordofan to four times the Port Sudan price. That gradient drives the 24 million people now classified by the IPC as in acute food insecurity, and the more than 750,000 in IPC Phase 5 catastrophe, the largest such caseload anywhere in the world since the metric was introduced. Donor financing alone cannot close this gap at sustainable cost: humanitarian wheat now lands in Darfur above 1,400 dollars per tonne, more than double pre war Yemen.

Yemen's frozen war and the Houthi shipping campaign #

Yemen entered 2026 in a structurally different position from Sudan. The April 2023 Riyadh Roadmap, agreed in principle between Saudi Arabia and the Houthis under Omani facilitation, froze most front lines and produced a fragile prisoner exchange and partial salary mechanism. It did not unify the two central banks, did not restart Houthi oil loadings at Hodeidah and Ras Isa, and did not address the status of the Internationally Recognized Government in Aden under Rashad al-Alimi's Presidential Leadership Council. The Houthi shipping campaign that began with the seizure of the Galaxy Leader on 19 November 2023, and escalated through 2024 with anti ship ballistic missile and drone strikes targeting Bab el Mandeb traffic, layered an external shock on top of an unresolved internal one.

Operation Prosperity Guardian, the US led coalition launched in December 2023, and the European Union's Operation Aspides launched in February 2024, did not restore confidence in the Red Sea route. Suez Canal transit revenues collapsed from 9.4 billion dollars in fiscal year 2022 to 2023 to roughly 3.5 billion in 2024 to 2025 according to the Suez Canal Authority and IMF Egypt Article IV staff, and container volumes through Bab el Mandeb fell more than 60 percent at the trough. Lloyd's List Intelligence and ACLED converge on roughly 65 confirmed kinetic engagements with commercial shipping between November 2023 and the partial pause negotiated through Omani channels in early 2025. Yemen's IMF Article IV has been suspended since 2014. The Aden Central Bank and the Houthi controlled Sanaa branch issue parallel currencies, with the Aden riyal near 2,400 to the dollar and the Sanaa riyal frozen near 530 by capital controls. Reunification proposals, including a redenomination floated in 2025 Saudi backed talks, founder on whether the Houthis accept fiscal subordination to a treasury they do not control.

Humanitarian indicators by country #

The table below sets out the principal humanitarian and macroeconomic indicators for the two countries at the start of 2026, drawing on UN OCHA, FAO IPC, the IMF, and central bank disclosures. Both cases share a structural feature the headlines obscure: the formal financial system has shrunk to a small fraction of its pre conflict size, and household consumption is intermediated through informal hawala, dollarized cash, or barter, which makes any donor instrument that depends on a functioning banking system unusable at the last mile.

Faction rent capture and mediation tracks #

Any credible peace architecture has to start from a clear picture of which faction captures which rent. In Sudan, the RSF dominates artisanal gold and the smuggling corridors that move bullion to Dubai, while the SAF holds Port Sudan customs, the Central Bank of Sudan apparatus, and a thin sliver of formal gold receipts through the Sudan Gold Refinery in Khartoum North. In Yemen, the Houthis collect customs at Hodeidah and Saleef and tax internal commerce in the populous highlands, while the Aden government collects oil and gas royalties at Mukalla and Balhaf, port fees at Aden, and Saudi balance of payments grants. Eritrea has used port access at Massawa and Assab to facilitate weapons movements that touch both conflicts, and Eritrean Defence Forces posture along the Tigray border keeps Ethiopian leverage over IGAD muted. Iran backed weapon flows continue to reach the Houthis through dhow networks south of the Gulf of Oman, with UN Panel of Experts seizures averaging one major interdiction per quarter in 2025.

Sudan mediation has fractured along three axes since late 2023. IGAD, chaired by Djibouti, has been weakened by the SAF's accusation of Kenyan and Ethiopian bias toward the RSF, and by the African Union's parallel High Level Panel that overlaps without coordinating. The Quad, comprising Saudi Arabia, the UAE, the US, and the UN, produced the Jeddah Declaration framework but no enforcement architecture. The Doha track, hosted by Qatar in August 2024, stalled within ten days when RSF representatives refused a humanitarian ceasefire ahead of political talks. Yemen mediation runs through Omani backchannels and the Riyadh Roadmap, with UN Special Envoy Hans Grundberg in a coordinating but subordinate role. Every escalation on the Israel Gaza front line since October 2023 has produced an escalation in Houthi anti shipping operations, and every pause has produced a tactical de escalation that the Houthis use to consolidate domestic control.

Financing architecture: what donors and creditors must build #

The combined Sudan and Yemen humanitarian appeals for 2026 total 7.1 billion dollars. Pledged funding through April is 2.0 billion. The shortfall is structural, not cyclical, and standard donor conferences will not close it. Three financing moves matter more than incremental pledges. First, a unified gold chain of custody regime applied at Dubai refiners, building on the 2024 London Bullion Market Association good delivery revisions, would cut the RSF rent base by half within twelve months and shift the Sudan war's underlying economics toward a financeable settlement. Second, a Saudi led conditional reconstruction facility for Yemen, structured as an escrow released against verifiable steps in central bank reunification and Hodeidah customs transparency, would replace the failed 2024 GCC 1.6 billion dollar package with an instrument that cannot be captured by either faction. Third, an IMF Article IV resumption for Yemen, suspended since 2014, would restore the surveillance infrastructure on which any sovereign debt restructuring or balance of payments support has to rest.

The downside is that none of these moves happens in 2026 and the two war economies drain Egyptian, Saudi, and Emirati fiscal space without political settlement. In that scenario, Red Sea shipping normalizes at 50 to 70 percent of pre 2023 volumes through 2027, the Suez Canal Authority loses another 6 billion dollars in cumulative revenue, the Sudanese famine caseload exceeds 1 million in IPC Phase 5, and the gold rent compounds into a cross border instability dividend for non state armed groups across the Sahel. The cost is roughly 25 billion dollars of regional GDP annually and a caseload that grows faster than any donor base can absorb.

Sources #

• Sudan Humanitarian Needs and Response Plan 2026
• Yemen Humanitarian Needs Overview 2026
• Sudan: Macro Poverty Outlook April 2026
• Egypt Article IV Consultation 2026 and Suez Canal Authority Annual Report 2024 to 2025
• Sudan Crop and Food Supply Assessment Mission 2025
• Red Sea Shipping Attacks Dataset and Sudan Conflict Tracker
• Breaking the Hourglass: Sudan's Gold and the Forces Fueling Its War
• Sudan: Stopping the War on Civilians
• The Houthi Threat to Red Sea Shipping: A Two Year Assessment
• Sudan war economy and Yemen Riyadh Roadmap reporting collection