Yemen’s Houthi rebels have targeted a US-owned cargo ship with a kamikaze drone just hours after Washington put the group back on its list of global terrorists. The drone smashed into the Genco Picardy bulk carrier late on Wednesday, 70 miles (110km) southeast of Aden, causing a fire that was soon extinguished, according to the United Kingdom Maritime Trade Operations organisation. It added: “Vessel and crew are safe and proceeding to next port of call.” The attack was a clear rebuke to the Biden administration for its announcement earlier on Wednesday that it was reassigning the Houthis to its list of “specially designated global terrorists”. Washington officials said they would design financial penalties against the Houthis to minimise harm to Yemen’s 32 million people. The UK foreign secretary, David Cameron, told Bloomberg: “I think we need to look at all the tools we have in the toolbox … Obviously, we have been using sanctions against a number of people in Iran and we need to look at how we can step that up if this behaviour continues.” Houthi leaders have said their attacks on commercial shipping in the Red Sea will end as soon as the “Israeli aggression” in Gaza stops, and warned that they would view any sanctions by Britain or America as a declaration of war. The Houthi deputy foreign minister, Hussein Alezzi, said before the US decision: “Any measure that harms Yemen’s interests will be considered a declaration of war, and preventing Israeli ships will not be confined to the Bab el-Mandeb Strait alone. He added: “There are others who will obstruct them through different means, and our coordination in this matter is advanced. The aggression by America and Britain and their shedding of Yemeni blood was unnecessary and will become a lifetime mistake unless they accept Yemen’s forthcoming response and cease their crimes against Gaza.” Mohammad al-Houthi, a member of the Houthi supreme political council, said: “Direct confrontation with America is a positive thing because it is the US that brought destruction, siege, and poverty to our country. America, which said it had a bank of targets, targeted everything in the Republic of Yemen – hospitals, roads, schools, markets, prisons, and gatherings.” He said the US target bank was the same as the one drawn up in Gaza on a daily basis. “We heard the groaning of children in Gaza, just as we heard the groaning of children in Yemen. The criminal is the same, the administration is the same, and the coalition is the same. The alliance against us [in the Yemeni civil war] was an American-Saudi-Emirati alliance, and today it is an American-Israeli-British alliance.” More shipping companies have said they would not risk using the Red Sea route until the crisis subsided. In a joint statement on Tuesday evening, 26 Yemeni and international organisations, including Save the Children and the Norwegian Refugee Council, expressed their “deep concern about the humanitarian impacts of the recent military escalation in Yemen and the Red Sea”. The group said that humanitarian organisations “have already begun to feel the impact of the security threat in the Red Sea, as disrupting trade leads to higher prices and causes delays in shipments of lifesaving goods”. The group said it expected that “further escalation may force more organisations to stop their operations in areas witnessing hostilities”. More than 75% of Yemenis depend on aid to live, amid a severe economic crisis caused by the war, the collapse of the currency, and restrictions imposed on imports and trade with countries abroad. The status of the Houthis as specially designated global terrorists was withdrawn in February 2021 by the Biden administration as it sought to make it easier to get humanitarian aid into Yemen. The US has said it will not go further and redesignate the Houthis as a foreign terrorist organisation (FTO). A special designation, as opposed to a FTO designation, does not include sanctions for providing “material support” and it does not come with travel bans. A US official said the designation would take effect in 30 days to allow time to carve out robust humanitarian exemptions so the measures targeted the Houthis and not the people of Yemen. The official said: “The people of Yemen should not pay the price for the actions of the Houthis.” The US intends that any group or financial organisation, including those outside the US, could face US sanctions or fines if it was proven they were knowingly undertaking business with the Houthis. The official added that the special terrorist designation may be lifted if the attacks on commercial shipping ended. They insisted that the designation was not intended to scupper the UN-led peace process that requires talks between the Houthis and the UN-recognised coalition government in Aden. But legal analysts suggest inhibitions may be placed on peace talks.