A UK-owned ship was reported to have been blasted by a rocket believed to have been fired by Iran-backed Houthi rebels yesterday.
The unnamed Bahamas-flagged vessel was sailing south around 35 nautical miles off Yemen's west coast when it came under fire.
Maritime security firm Ambrey said "The affected vessel was issuing distress calls relating to piracy/missile attack."
A Royal Navy warship was reported to be heading for the location last night amid rising tension triggered by the Gaza War.
The UK Maritime Trade Operations (UKMTO) agency - run by The Royal Navy - said it had received "a report of Uncrewed Aerial Systems activity including a potential explosion.”
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It remained unclear whether anyone on board the ship had been hurt or how badly the ship was damaged.
The United Kingdom Maritime Trade Operations (UKMTO) had also informed that drone activity was reported in the area.
A Pentagon official reportedly told Al Jazeera missiles and drones were launched from Yemen towards the US destroyer Carney and commercial ships in the Red Sea.
The attack has been confirmed by Israeli authorities, YNet reports.
After reports of UAV activity and an explosion in the Bab al-Mandab Straits, a security official revealed on Sunday that an attempted attack by a Yemeni UAV was prevented in the Red Sea.
Shippers were warned by the UKMTO that the apparent blast took place in the Bab el-Mandeb Strait that separates East Africa from the Arabian Peninsula, Sky News reports.
The Bab el-Mandeb links the Red Sea to the Gulf of Aden.
The region has been stage to a series of attacks in recent weeks attributed to Yemen's Iranian-backed Houthi rebels.
The militia group have also launched missiles and drones toward Israel over its war on Hamas in the Gaza Strip.
The Houthis did not immediately acknowledge the latest incident.
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However, it is understood Houthis reportedly caused minor damage in an attack on an Israeli-owned vessel - The Unity Explorer - in the Persian Gulf, just hours before rocket attack on UK-owned cargo ship.
Israeli reporter Itay Blumenthal tweeted what appears to be a statement from the Iran-backed militia group, reading: "We attacked two 'Israeli' ships in the Straits of Bab al-Mandab, the ship "Unity explorer" by firing a rocket and the ship "Number 9" by means of a UAV.
"The attack on the ships came, according to him, after warning messages were sent to both ships."
It comes after a tanker owned by an Israeli billionaire was reportedly hijacked off the coast of Yemen with 22 crew members on board.
The Houthi apparently threatened to attack the vessel after previously targeting another Israeli-owned ship - the Galaxy Leader -days earlier.
The US navy has reportedly engaged in the area as other ships have been warned to avoid the surrounding waters after the Central Park was seized.
It is not completely clear yet who was behind the attack in the Aden Gulf, although according to reports Iran-backed Houthi rebels did threaten the ship if it did not divert to the Hodeida port.
And the company who manage the ship described it as "a suspected piracy incident", according to WNKY.
UK military issued a warning to sailors nearby that “two black-and-white craft carrying eight persons in military-style clothing”, had been spotted in the area.
The surrounding waters are controlled by Yemen's government which has battled Iran-backed Houthi rebels for years.
Just days earlier, another Israeli-owned cargo ship was hijacked by the Iran-backed militia in the Red Sea.
Chilling footage showed a chopper landing on the cargo carrier before several gunmen made their mad dash on board.
United Kingdom Maritime Trade Operations put the November 19 hijacking as having occurred some 90 miles off the coast of Yemen's port city of Hodeida, near the coast of Eritrea.
The Houthi militants stormed the desk and held the international crew of 25 at gunpoint during the brutal attack.
Israeli Prime Minister Benjamin Netanyahu slammed the capture of the cargo as "terrorism".
The Houthis - based in Yemen - previously vowed to target all ships owned by Israel or flying their flag in the Red Sea.
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