Iran promises a year's worth of oil to Yemen's Houthis

Iran will provide Yemen with oil and electricity, a Houthi delegation returning from a two-week visit to Tehran announced on Thursday, although it remains unclear if the supply would reach areas outside the control of the Shiite militia.

The delegation was headed by Saleh al-Samad, president of the Houthis’ political wing and was "successful and fruitful," according to a statement by Samad to Yemen's Saba news agency.

He promised that the visit would have a "positive impact" on the economy of Yemen, currently the poorest country in the Middle East, which appears to have worsened since Houthi militiamen overran the capital Sanaa in September.  

The announcement is expected to further increase fears among Yemen's Gulf neighbours that Iran is looking to expand its influence over the region.

Tensions have increased in Yemen since the Shiite Houthi militiamen seized power and dissolved the elected parliament in February.

On Wednesday, the Houthi militia rejected a call for Yemen's negotiations to be moved to the Saudi capital, claiming that Riyadh had not operated as a neutral actor in Yemen's political discussions.

They also announced on Thursday that they would begin military training exercises near the border with Saudi Arabia.

'A horrible scenario'

The new deal comes as UN special advisor on Yemen Jamal Benomar warned that the country was on the brink of a "civil war" as the country continued to struggle under the weight of its myriad political divisions.

"If there is no agreement, the prospects are very bleak," he told Al-Jazeera.

"It’s a combination of scenarios like Syria, Libya and Iraq. It’s a horrible scenario and all sides are aware that every effort should be made for a peaceful way forward."

Benomar has been responsible for facilitating meetings and negotiations between Yemen’s political factions, but has previously described his "frustration" at the lack of progress.

Former President Abd Rabbuh Mansour Hadi fled the capital of Sanaa after submitting his resignation in January and now resides in the southern city of Aden where he has set himself up as a firm opponent of Houthi control.

Hadi’s resignation has also further increased calls for Yemen’s south to break away and form an independent state.

The People’s Democratic Republic of South Yemen was a Marxist-Leninist state that existed between 1967 and 1990 when it reunified with the north.

A southerner himself, Hadi’s presidency had apparently placed a block on calls for secession, but his flight to the south has increasingly polarised the impoverished country and raised fears about a wider conflict.

World Bank halts activities over security fears

Benomar's warning coincided with an announcement by the World Bank that it would be halting its operations in Yemen, because "the situation in Yemen had deteriorated to the degree that the bank was unable to exercise effective management over its projects."

"This decision was based on a significant decline in the ability of bank staff to communicate and coordinate with government counterparts, and that many project locations have become inaccessible preventing full fiduciary and management oversight," it said in a statement on Thursday.

Though the bank said it would continue to monitor the situation in the country, it stated that all projects financed by the International Development Association – which focuses on the world’s poorest countries – had been halted.

The bank, which has pledged more than a billion dollars to develop Yemen, said the disbursement of funds had been suspended, and that its office in Sanaa was closed temporarily in mid-February in response to the deterioration in security.

Shiite militiamen kill two protesters in Baida

Meanwhile, Shiite militiamen in the central city of Baida killed two protesters on Thursday when they opened fire on a rally attended by thousands of people in support of President Hadi, a medic and an activist said.

The Houthi militia fired live rounds to disperse them, said organising committee member Fahd al-Tawil. 

A medic said "two people were killed and six others were wounded," raising an earlier toll, after an injured protester succumbed to his wounds. 

Demonstrations in support of Hadi have multiplied since he escaped from house arrest in the capital last month and resumed power from second city Aden.