Houthis have encircled Taiz since early October 2026, severing main supply routes from Aden and imposing a siege that has restricted food, fuel, water, and medicine to the city and Al-Qahira Castle, which remains under government control. Yemeni forces backed by Saudi Arabia have reported recapturing villages and districts in Taiz province in early November while repelling Houthi assaults across multiple fronts, including claims of over 1,000 strikes in recent days. Houthis are mobilizing additional forces and FPV drones for a broader offensive aimed at Taiz and Aden ahead of potential Saudi talks, though government counteroffensives continue. The market’s low probabilities for capture by December 31 reflect these defensive gains and fortified positions despite the prolonged blockade and humanitarian strain.