WRAPUP 8-Houthis impose Saudi naval blockade, opening new front in US-Iran war

Adds Iran receives proposals in paragraph 3, details on U.S. naval blockade, Lebanon and Hamas in paragraphs 14-17

By Nayera Abdallah, Eman Abouhassira and Timour Azhari

DUBAI/RIYADH, July 20 (Reuters) - Yemen's Iran-aligned Houthis said on Monday they were imposing a naval blockade on Saudi Arabia, a move that opens a new front against the United States in its war on Iran and widens the threat to global energy supplies and trade beyond the Gulf.

The Houthis made their announcement despite signs that Tehran and Washington want to resume diplomacy to halt a worsening cycle of attacks that has all but wrecked a fragile interim agreement signed last month.

Iran's Foreign Ministry said mediators had presented "proposals" to Tehran, signalling that diplomatic contacts remain active, but gave no details.

Oil prices rose briefly after the Houthi statement but later fell back as traders held out hope of a diplomatic breakthrough in the war.

Iran had been pressing the Houthis to close the Bab el-Mandeb gateway to the Red Sea if the U.S. continued to attack Iranian power infrastructure.

The full closure of the Bab el-Mandeb strait would reduce global oil supply by 7% as it would leave most of Saudi oil exports unable to leave the region. The disruption would add to the huge cut to global oil flows from the war in the Gulf, which has already reduced shipments by 10% of global supply.

In their statement, the Houthis' armed forces said they were declaring "a maritime embargo against the criminal Saudi enemy, based on the equation of 'an eye for an eye', effective immediately" in response to what they called "an unjust and oppressive siege" imposed on Yemen by the Saudis.

There was no immediate response from Saudi Arabia.

DIPLOMATIC PUSH TO RESTORE CEASEFIRE

A senior Iranian official told Reuters on Monday that Tehran had received a proposal from mediators for a 10-day ceasefire in efforts to salvage the interim deal, intended to pave the way to a lasting agreement to end the war that began on February 28 with U.S.-Israeli attacks on Iran.

Neither the ministry nor the official who spoke to Reuters gave any details on the putative ceasefire discussions.

Two Pakistani government sources said separately that Iranian Interior Minister Eskandar Momeni had asked Pakistan to resume its mediation role in the conflict.

The diplomatic push followed another night of U.S. strikes on Iranian cities and attacks by Iran's Revolutionary Guards on U.S. military assets across the region.

U.S. President Donald Trump, under mounting political pressure at home over rising gasoline prices since the war began and Iran effectively closed the vital Strait of Hormuz, defended the latest strikes on Iran as honoring the deaths of up to three American service members in recent Iranian attacks.

The U.S. has in turn mounted a naval blockade of Iranian ports, with the U.S. military saying on Monday that it had redirected seven commercial vessels and disabled one as part of the U.S. naval blockade on Iranian ports.

The war has killed thousands of people, mostly in Iran and Lebanon, part of which has been occupied by Israeli forces following attacks on Israel by Hezbollah militants who said they were acting in solidarity with Tehran.

Lebanese President Joseph Aoun is due to meet Trump at the White House on Tuesday to present a plan on how to disarm Iran-aligned Hezbollah and secure an Israeli withdrawal.

Israel also still has forces in Gaza following two years of war ignited by the Palestinian militant group Hamas' attack on southern Israeli communities on October 7, 2023. Hamas said on Monday it had named top negotiator Khalil Al-Hayya as its overall leader, a move that an analyst said could signal a tougher stance by the group towards calls for it to disarm.

IRAN SAYS TANKERS EXPLODED

The Islamic Revolutionary Guard Corps (IRGC) said two oil tankers had exploded after attempting to transit the strait via an "unsafe" route. On Sunday, the IRGC had said two ships were involved in an "accident" in the same area. It was unclear whether the two incidents were related.

Reuters could not immediately verify the incident. The IRGC statement gave no details about the vessels or any casualties.

Separately, a vessel was struck by an unknown projectile off Oman's coast, overlooking the Strait of Hormuz, the United Kingdom Maritime Trade Operations agency said. The vessel remains adrift but the crew are safe, it said.

U.S. Central Command said its ninth consecutive night of strikes against Iran aimed at "degrading" the country's ability to attack commercial vessels in the strait.

In Iran, explosions were reported in Tabriz, Chabahar, Konarak, Bandar Mahshahr and Bandar Imam Khomeini. One person was killed and several wounded southwest of Tabriz, according to state news agency IRNA.

The IRGC said it targeted U.S. aircraft at Jordan's Aqaba airport with ballistic missiles, as well as military assets at Kuwait's Al-Adiri camp and Ali Al Salem Air Base, and positions in Syria.

Sirens sounded in Bahrain throughout Monday. Kuwait's army said it again intercepted Iranian drones.

Kuwait's government said a desalination plant had been attacked on Sunday for the second day running, causing a fire, in what it called a direct strike on vital civilian infrastructure.

Desalination facilities supply most drinking water in many Gulf states, serving tens of millions of people in one of the world's driest regions. Iran accused the U.S. on Saturday of hitting one of its own desalination plants.

(Reporting by Nayera Abdallah and Eman Abouhassira in Dubai; Additional reporting by Dmitry Zhdannikov in London, Enas Alashray and Hatem Maher in Cairo and Idrees Ali and Michael Martina in Washington; Writing by Gareth Jones and Timothy Heritage; Editing by Ros Russell and William Maclean)