Grant Shapps has hinted the UK and Western allies could take action against Iranian-backed Houthis if attacks in the Red Sea continue.
The Defence Secretary warned the militia group to “watch this space” after their latest assault on the major shipping route.
It comes after British and American naval forces repelled what is believed to be the largest barrage to date by the Houthi rebels on Tuesday night.
Mr Shapps said today: “We must be clear with the Houthis, that this has to stop and that is my simple message to them today: Watch this space.”
Royal Navy air defence destroyer HMS Diamond and three US warships backed by fighter jets downed 18 drones and three missiles fired by the Houthis in Tuesday’s attack.
Mr Shapps said Iran was “guiding” the Shiite group, which has held Yemen’s capital since 2014.
The UK, US and allies last week issued a “final warning” to the Houthis over their Red Sea attacks, which they have vowed to continue until Israel ends its war with Hamas in Gaza.
Asked if there could be Western military action against Houthi targets in Yemen or Iran, Mr Shapps said: “I can’t go into details but I can say that the joint statement that we issued set out a very clear path that if this doesn’t stop then action will be taken, so I am afraid the simplest thing is to say watch this space.”
A total of 18 attack drones, two anti-ship cruise missiles and an anti-ship ballistic missile were shot down in Tuesday’s operation, according to the US Central Command.
It added that it was the 26th attack on the Red Sea, which gives access to the Suez Canal, since November 19.
The Prime Minister’s official spokesman said yesterday: “I am not going to speculate about how we will or will not respond to continued attacks.
“We do reserve the right to take further steps to protect commercial shipping and avoid the risk of further destabilising the region. That is something we will keep under review.”
Some shipping lines and oil giant BP have already diverted vessels around southern Africa, adding time and costs to journeys, rather than risk the Red Sea.
But if the crisis continues it could force prices up for consumers at a time when inflation remains high.
Bank of England Governor Andrew Bailey said he was monitoring the situation closely during an appearance on the Commons Treasury Committee yesterday.
He told MPs: “We’ve certainly seen, as best we can tell from the monitoring, shipping traffic is being affected and is being rerouted. That will increase shipping prices and shipping costs. I think initially that will be an issue in the monetary policy world.
“I would say one of the things, fortunately, that hasn’t happened, is that we have not had a prolonged spike in oil prices.
“We had a bit of an initial spike and at the moment we’re seeing that, if anything, the oil price is actually coming down a bit, and there seems to be some price management to keep it there.”
