DUBAI -- Saudi Crown Prince Mohammed bin Salman started the year on a high note. He had just visited the White House where he was embraced by President Trump. Even after the war with Iran kicked off, Saudi Arabia looked relatively well positioned. It could export oil through a pipeline that bypassed the blocked Strait of Hormuz.

But the Saudis' escalating fight with Iran-backed Houthi militants in neighboring Yemen now poses new challenges to the kingdom's security and the crown prince's ambitious but already struggling plans to transform the country's oil-dependent economy.

On Saturday, at least one Houthi missile slammed into the Saudi capital's international airport, killing at least 12 people and injuring hundreds more, many seriously. It was the single deadliest attack on the U.S. or its Gulf allies in the conflicts related to the Iran war. A 28-year-old Egyptian flight attendant bled to death after her arm was blown off, one of several victims to lose limbs, officials briefed on the attack said.

Two terminals were struck and their roofs partially collapsed, people familiar with the damage said. Video verified by Storyful, which like The Wall Street Journal is owned by Dow Jones, showed passengers rolling suitcases past a trail of blood on the floor as the airport was evacuated. Authorities reported more attacks on the closed airport Sunday, saying a projectile caused a fire in Terminal 4 and led to injuries.

As recently as this summer, Saudi officials briefed journalists that the Houthi situation was under control. But the militants' escalating attacks, which they say are retaliation for Saudi actions against them, have hit airports and energy facilities -- including the kingdom's main east-west pipeline and refineries -- showing the growing threat along the southern border.

The conflict is jeopardizing Saudi efforts to build travel and tourism into a pillar of the economy, including a marquee international investment conference scheduled for the end of the month that is now increasingly in doubt. The costs of the war have already widened the budget deficit and threaten to push the economy into contraction.

How Prince Mohammed handles this test will have consequences that stretch well beyond the kingdom. Saudi Arabia is a major source of funding for the global tech industry and artificial intelligence projects. It is also a crucial provider of basing and overflight rights to the U.S. military.

Trump told reporters over the weekend that the U.S. was in communication with the Houthis but might join Saudi strikes on the militant group. "What they did was very bad," the president said Saturday night.

On Sunday, a Houthi military spokesman reiterated the group's warning that Saudi airports are targets. Saudi officials said they are running low on interceptors needed to fend off further strikes.

Intensifying attacks on Riyadh, which is 500 or more miles from Houthi territory in Yemen, have transformed parts of the Saudi capital into a battle zone, with residents taking cover as explosions ring out across the city. Debris from an intercepted ballistic missile hit a kindergarten and a medical clinic complex Thursday. Workers in the city's financial district, students at some international schools and diplomats were ordered to evacuate or take shelter.

The 41-year-old crown prince is shuttling between heavily guarded palaces equipped with bunkers and is guarded by a handpicked security team, officials familiar with his movements said. His last public appearance was Tuesday, when he gave blood to support a national donation drive.

The Saudi leader has few good options, said Kristian Coates Ulrichsen, a Persian Gulf expert and fellow with Rice University's Baker Institute. "Any military response risks getting drawn in deeper to an asymmetric conflict in which the Houthis have shown they have the ability to inflict significant and symbolic damage."

Saudi press officials didn't respond to a request for comment. Prince Mohammed has plowed funds over the past decade into a slate of projects with extraordinarily complex engineering requirements aimed at signaling the kingdom's modernization and drawing investment and tourism. They include the futuristic city of Neom, an enormous cube-shaped building in Riyadh, and a desert ski resort. The total cost ran to the trillions of dollars, aggressive for a government with an annual budget of around $350 billion. The costs and economic damage of war with Iran are making that already implausible math impossible to balance.

Foreign investment fell in the first two quarters of the year and is running well behind the crown prince's 2030 target. Rising defense and infrastructure costs threaten to siphon away money needed for the economic diversification drive. Even the kingdom's push to become an AI hub now carries new risks, with data centers emerging as targets.

Many of the enormous projects spearheaded by Prince Mohammed are stalled or under review. In January, Saudi Arabia gave up on plans to host the 2029 Asian Winter Games. It still has to find a way to fund the World Expo in 2030 and the soccer World Cup four years later.

The non-oil side of the country's economy was smaller in the second quarter than in the first, according to Capital Economics. The Saudi Finance Ministry now expects GDP to shrink by 3.6% in 2026.

The kingdom was able earlier in the year to pump oil across the desert to the Red Sea to escape Iran's chokehold on the Strait of Hormuz. It got a boost from those sales and higher prices.

But in July, the Houthis announced a maritime blockade of Saudi Arabia, putting Red Sea shipping at risk. In September, an attack on the East-West pipeline struck at the kingdom's main escape route from Hormuz.

Then the militants took aim at Saudi aviation, putting pressure on another pillar of the economy. The Houthis have hit the King Khalid International Airport in Riyadh at least four times.

The crown prince got Saudi Arabia involved in Yemen's civil war in 2015, backing the country's internationally recognized government in a fight against the Houthis. The Saudi-led intervention included devastating airstrikes that inflamed the conflict and helped fuel the Houthis' campaign against the kingdom, including attacks on oil facilities and cities such as Riyadh. The two sides fought to a stalemate and a ceasefire in 2022.

The new outbreak of violence came as Prince Mohammed was working to contain the confrontation with Iran. Attacks by Tehran early in the war demonstrated the risk to energy facilities and economic assets such as airports across the Gulf.

Saudi Arabia was also struggling to cover the vast country with air defense and was shifting batteries around to try to protect palaces and energy infrastructure, people familiar with the kingdom's deliberations said.

While supportive of continued economic pressure on Iran, the crown prince was telling his advisers to keep the diplomatic channel open with Iran and make clear the kingdom's intentions weren't confrontational, the people said.

The Houthis began sounding more bellicose through the spring and into the summer. Saudi intelligence showed Iran was actively pressing them to enter the war, the people said. But some Saudi officials also assessed that the Houthis had already absorbed substantial military damage from U.S. and Israeli attacks last year and would make decisions in their own interests, not Iran's, they said.

The Houthis made their intentions clear in August by mounting an offensive to take territory along the coast of the Bab al-Mandeb chokepoint at the mouth of the Red Sea.

The kingdom, concerned about the risks of escalation, didn't send air support as its Yemeni allies tried to fend off a Houthi assault on the strategic port city of Mokha. The city fell, as did other key positions along the coast, raising the Houthi threat to Saudi oil shipments.

Despite Prince Mohammed's efforts to build his relationship with Trump -- including a pledge to invest around $1 trillion in the U.S. -- the U.S. has so far resisted the crown prince's requests for military help to roll back the Houthi advance, though it has sent military advisers.

The kingdom has called for help from its military ally Pakistan and is scouring the globe for air defenses, the people said. It is also looking to recruit foreign fighters to help its Yemeni allies, they said. At the same time, it is also increasingly looking to see if there is room for a diplomatic solution to the conflict, which otherwise looks hard to contain, they said.