**Egypt’s alignment with Gulf states against Iran-backed Houthi attacks has heightened regional tensions, even as Cairo pursues parallel diplomacy with Tehran.** President Abdel Fattah el-Sisi’s October 18 statements signaled readiness to provide “all necessary” defensive support to Saudi Arabia if requested, following intensified Houthi strikes on Saudi targets including Riyadh’s airport and energy facilities. Egypt has suffered sustained economic losses from Red Sea shipping disruptions tied to these Iran-aligned proxies, prompting parliamentary moves to authorize potential military assistance. Simultaneously, Egyptian Foreign Minister Badr Abdelatty met Iranian counterpart Abbas Araghchi on October 17 in Baghdad, calling for de-escalation, renewed U.S.-Iran dialogue, freedom of navigation, and an end to attacks on Gulf states. These dual tracks—defensive posturing alongside direct talks—reflect Cairo’s effort to protect national security and economic interests without immediate escalation. Upcoming diplomatic engagements, Houthi activity levels, and any shifts in Saudi or Iranian positioning could influence whether direct targeting of Egypt materializes within the market’s timeframe. Trader consensus prices this risk based on the balance between proxy conflict spillover and ongoing de-escalation efforts.