Dubai: Houthi fighters and loyalists of Yemen`s President Abd-Rabbu Mansour Hadi are locked in a power struggle that diplomats say risks drawing in neighbouring Saudi Arabia and its main regional rival Iran.
The duel between the northern-based Shi`ite Muslim militia and the mostly Sunni southern backers of the president threatens to erode what remains of a Yemeni state weakened by years of corruption, poor governance and a series of conflicts.
A worst case scenario - sectarian war with foreign powers backing opposing sides - would deepen already grave humanitarian suffering in the impoverished country and endanger strategic shipping lanes.
The political crisis threatens to pit Yemen`s two main Islamic sects against each other.
Zaydi Islam, an offshoot of Shi`ism, predominates in the northern highlands while Sunni Shafi`i Islam is the majority school in the south and east. Unlike in Syria and Iraq, however, followers of the two schools pray together in the same mosques and have peacefully coexisted for centuries.
The Houthis are a Zaydi Islamist militia group which says it has no sectarian agenda. They describe their takeover of much of the country as a revolution for all Yemenis. Sunni Islamist parties and tribes reject this.
Ultra-hardline Sunni al Qaeda militants have joined forces with some tribal opponents of the Houthis in months of fighting, and suicide bombings at Houthi mosques on Friday claimed by Islamic State raised the risk of a sectarian war.
The threat of war has raised fears over the security of oil supplies through the Bab al-Mandab shipping lane, a vital energy gateway for Europe, Asia and the United States. More than 3.4 million barrels of oil per day passed through Bab el-Mandeb in 2013, according to the U.S. Energy Information Administration.
Closure of the strait, which connects the Red Sea with the Gulf of Aden and the Arabian Sea, could keep tankers from the Gulf from reaching the Suez Canal or Sumed Pipeline, diverting them around the southern tip of Africa. Egypt has said it could not stand by if its interests were threatened.
Southern secessionists say northerners based in the capital Sanaa have discriminated against them and usurped their resources since the unification of North and South Yemen in 1990. Despite leading the North`s war effort in a 1994 North-South civil war, Hadi has been welcomed in Aden since fleeing the capital last month.
The southern Hirak movement has struggled to advance its cause, and some of its armed factions have pledged allegiance to Hadi - a Southerner by birth - hoping that he might advance their dream of an independent South.
Yemen is the base of al Qaeda in the Arabian Peninsula, one of the network`s most ambitious branches. It has carried out years of bomb and gun attacks on the Yemeni state, plotted to blow up U.S.-bound airliners and claimed responsibility for an attack on a magazine in Paris in January that killed 12.
AQAP has seized parts of the remote south and east, and stands to gain if the Yemeni military continues to split and relent in its military campaign against it.
Weak, impoverished and divided among pliable tribal leaders, Yemen has for decades been susceptible to outside influence. Saudi Arabia, the oil giant to its north, has tried to maintain calm by funding allied Islamists and tribal sheikhs. Iran is a newer player, and has trained, armed and funded the Houthis, Yemeni and Iranian officials have said. The Houthis deny receiving military training from Iran.
The United States has worried that political instability in Yemen will embolden al Qaeda, and has trained Yemen`s military to fight them while it has kept up a campaign of drone strikes against the militants. But the withdrawal of U.S. diplomatic and military staff from Yemen amid deepening security chaos has called into question their counter-terrorism strategy.
Saudi Arabia, the world`s top oil exporter, is concerned by the Houthi presence on its mountainous southern border. The Houthis held drills on the Saudi border using heavy weapons acquired from the Yemeni army this month, raising tensions with Riyadh. Gulf Arab officials warned this week that Yemen`s security and that of the Gulf was an "indivisible whole", raising the possibility of a military intervention.
The erosion of the central government would worsen already chronic poverty and lack of development in Yemen. Saudi Arabia has suspended most of its financial aid to Yemen, worried that the Houthis will grab it, Yemeni and Western sources say.
Fighting temporarily displaced around 100,000 people last year, according to the United Nations, but the world body said in February that recent insecurity had not yet curtailed aid operations. Hunger, corruption and lack of basic services, water and infrastructure for Yemenis remain huge problems and over a quarter of a million former refugees, mostly Somalis, struggle to survive in the country.
Falling oil prices have cut state energy income; oil exports fell to $1.67 billion last year from $2.66 billion in 2013, the central bank says. Yemeni oil flows through the Marib pipeline, its main export route, at a rate of around 70,000 barrels per day (bpd). Before a series of attacks by tribesmen began against it three years ago, the 435 km (270 mile) pipeline carried around 110,000 barrels per day to Ras Isa, an export terminal on the Red Sea. Tribal conflicts and al Qaeda insurgency are disrupting oil and gas exports in other parts of the economy.