Editor’s Note: The following report is excerpted from Joseph Farah’s G2 Bulletin, the premium online newsletter published by the founder of WND. Subscriptions are $99 a year or, for monthly trials, just $9.95 per month for credit card users, and provide instant access for the complete reports.

An ongoing but little-noticed battle in Yemen on the Arabian Peninsula may be the first new battleground of a proxy war between Shiite Iran and Sunni Saudi Arabia – and it’s feared the dispute could erupt across the peninsula and spread throughout the Middle East, according to a report from Joseph Farah’s G2 Bulletin.

The conflict reflects the beginning of a showdown between Iran and Arab countries allied with the United States to acquire regional supremacy. It’s largely affecting only Yemen at this point, but an expansion of the battlefield could be looming.

Yemen, which is next door to Saudi Arabia, is battling highly organized rebels of the Shiite Houthi in the Saada region in the northern part of the country. Fighting had been intermittent for months but erupted into a full-scale battle just about two weeks ago after the 66,000-strong Yemeni armed forces initiated attacks on the Houthis there.

There had been a ceasefire assembled in 2008, but it now has broken down.

The Houthis are from the Zaydi sect, which follows a strict form of Shiite Islam. Supported by training and arms from Iran, the Zaydis seek to restore the Zaydi imam who was overthrown in 1962. The Houthis are named after their founder, Badreddin al-Houthi, who was killed in 2004 by the Yemeni army.

Keep in touch with the most important breaking news stories about critical developments around the globe with Joseph Farah’s G2 Bulletin, the premium, online intelligence news source edited and published by the founder of WND.

Iranian support for the insurgents is seen as a means of gaining a military advantage next to Saudi Arabia. The Sunni Saudi kingdom sees the occasion as a potential showdown over deep-seated religious differences with Shiite Iran, which already has caused alarm with its nuclear weapons development program.

That has prompted Saudi Arabia to contemplate its own nuclear development program. In fact, the Saudi government recently announced plans to build a nuclear plant. Prominent Saudis say if Iran produces a nuclear weapon, they will do the same.

The situation reflects Iran’s effort in recent years to increase its influence in other Arab countries with the rise of Shiite minorities. Even Saudi Arabia, the bastion of Sunni Islam, has seen such a rise in its Shiite population due to incoming workers from other Muslim countries.

Shiites in Saudi Arabia, however, report discrimination and ongoing efforts to minimize their growing influence, creating dissension with the nation and posing a potential risk to the kingdom’s royal family.

The concern among security officials is that similar proxy wars as in Yemen may begin soon in such other Arab countries as Kuwait, Sudan, Morocco, Bahrain and Lebanon, given their increasing Shia population.

For the complete report and full immediate access to Joseph Farah’s G2 Bulletin, subscribe now.

Note: Read our discussion guidelines before commenting.