Sporadic armed clashes between Yemen's Houthi rebels and government forces are straining peace efforts, and the rivals are now also battling over revenue from ports, trade, banking and natural resources, the country’s U.N. envoy said Monday.

Special Representative Hans Grundberg told the U.N. Security Council that the fight over economic wealth “has become inseparable from the political and military conflict.”

While fighting has decreased markedly in Yemen since a truce in April 2022, he said, “continued sparks of violence alongside public threats to return to large-scale fighting increase fear and tensions.”

Grundberg said Yemenis have enjoyed the longest period of relative calm since the civil war erupted in 2014, but “the situation on the ground remains fragile and challenging." He pointed to clashes in five frontline areas, including Hodeida where Yemen’s main port is and the oil-rich eastern province of Marib which Iran-backed Houthi rebels attempted to seize in 2021.

Yemen’s conflict began when the Houthis swept down from their northern stronghold and chased the internationally recognized government from the capital of Sanaa. A Saudi-led coalition intervened the following year on behalf of the government and in time the conflict turned into a proxy war between Saudi Arabia and Iran.

The war has devastated Yemen, already the Arab region's poorest country, and created one of the world’s worst humanitarian disasters. More than 150,000 people, including fighters and civilians, have been killed.

The restoration of Saudi-Iran ties in April has raised hopes of progress in ending the conflict.

Grundberg said that although the truce was not renewed when it expired last October, the lessening of combat has opened the door for serious discussions with the parties on ending the war. He urged both sides to take “bold steps” toward peace.

“This means an end to the conflict that promises accountable national and local governance, economic and environmental justice, and guarantees of equal citizenship for all Yemenis, regardless of gender, faith, background or race,” he said.

On the economic front, Grundberg said, the value of the Yemeni riyal has dropped more than 25% against the U.S. dollar in the past 12 months in the southern port city of Aden, which is now the seat of the internationally recognized government. Conflict-related road closures have more than doubled the cost of transporting goods, he said.

Joyce Msuya, the U.N. assistant secretary-general for humanitarian affairs, said 17.3 million of Yemen's 21.6 million people need aid. She said one of the main reasons for the immense level of humanitarian needs is the deteriorating economy.

“Only by stabilizing the economy can we reduce the staggering number of people in need,” she said. She said that includes “the long overdue resumption of oil exports from government-held areas” and an end to the “obstruction to the transport of commercial goods from government- to Houthi-controlled areas.”

Halfway through the year, Msuya said, the $4.3 billion U.N. appeal for Yemen is only 29% funded and the World Food Program’s operation to help the severely malnourished is reaching just 40% of needs. Without more funding by September, she said WFP "may be forced to cut as many as five million people from food assistance.”

U.N. humanitarian coordinator David Gressly reported a key step in efforts to avoid an environmental disaster in the Red Sea, telling the council that the Houthis provided authorization Monday for the transfer of 1.1 million barrels of crude oil from the Safer, a rusting tanker moored 50 kilometers (31 miles) northeast of the Houthi-controlled port of Hodeida.

The Yemeni government bought the tanker in the 1980s to store up to 3 million barrels of oil pumped from the Marib oil fields. Because of the war, the tanker was not maintained since 2015, with seawater seeping into the hull causing damage that increased the risk of sinking and a major oil spill.

Gressly said that since the salvage ship Ndeavor arrived at the Safer site May 30 it has stabilized the tanker so its oil can be transferred. He said the tanker Nautica is preparing to sail from Djibouti and should start taking on oil from the Safer by early next week. The operation will take about two weeks, he said.

“The completion of the ship-to-ship transfer of the oil will be a moment when the whole world can heave a sign of relief,” Gressly said.