The US will re-designate the the Houthis as "global terrorists", National Security Advisor Jake Sullivan announced on Wednesday.
He said the designation is in response to the Iran-backed group’s attacks on commercial shipping in the Red Sea.
The decision will require US financial institutions to freeze Houthi funds and its members will be banned from the US.
A Houthi spokesman said the decision would not stop the group trying to interrupt Israeli shipping operations.
On Wednesday evening, a Houthi spokesperson said the group had successfully targeted the Genco Picardy, and that the attack was a response to "the American-British aggression against our country".
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