Suspicion for the attack on the Greek-owned bulk carrier Magic Seas immediately fell on the Houthi forces, particularly as a security firm said it appeared bomb-carrying drone boats hit the ship after it was targeted by small arms and rocket-propelled grenades.
The rebels' media broadcaster reported on the attack but did not claim it.
A renewed Houthi campaign against shipping could again draw in US and allied forces to the area, particularly after US President Donald Trump targeted the rebels in a major air strike campaign.
"It likely serves as a message that the Houthis continue to possess the capability and willingness to strike at strategic maritime targets regardless of diplomatic developments," Yemen analyst Mohammad al-Basha, at the Basha Report risk advisory firm, said.
The UK military's United Kingdom Maritime Trade Operations centre first said that an armed security team on the unidentified vessel had returned fire against an initial attack and that the "situation is ongoing".
It described the attack as happening 100km southwest of Hodeida, Yemen, which is held by the country's Houthi rebels.
"Authorities are investigating," it said.
It later said the ship was on fire after being "struck by unknown projectiles".
Ambrey, a private maritime security firm, issued an alert saying that a merchant ship had been "attacked by eight skiffs while transiting northbound in the Red Sea".
Ambrey later said the ship also had been attacked by bomb-carrying drone boats, which could mark a major escalation.
It said two drone boats struck the ship while another two had been destroyed by the armed guards on board.
The UKMTO centre said the ship was taking on water and its crew had abandoned the vessel.
Moammar al-Eryani, the information minister for Yemen's exiled government opposing the Houthis, identified the vessel attacked as the Magic Seas and blamed the rebels for the attack.
The ship had been broadcasting it had an armed security team on board in the vicinity the attack took place and had been heading north.
"The attack also proves once again that the Houthis are merely a front for an Iranian scheme using Yemen as a platform to undermine regional and global stability, at a time when Tehran continues to arm the militia and provide it with military technology, including missiles, aircraft, drones, and sea mines," al-Eryani wrote on X.
The Magic Seas' owners did not respond to a request for comment.
The Houthi group's al-Masirah satellite news channel acknowledged the attack occurred but offered no other comment on it as it aired a speech by its secretive leader Abdul Malik al-Houthi.
However, Ambrey said the vessel targeted met "the established Houthi target profile," without elaborating.
Pirates from Somalia also have operated in the region although typically they have sought to capture vessels either to rob or ransom their crews.
But neither the Yemeni coast guard nor the pirates have been known to use drone boats in their attacks.
