The missile was sacked from the city of Hodeidah, the last Houthi-controlled port, which is the site of fierce fighting between the Houthis and forces from the Saudi-led worldwide coalition which is allied with Yemen's internationally recognized government.
News of the planned reduction in aid to Saudi Arabia comes the same day as their opponents in the Yemen Civil War, the Houthi Rebels, fired an anti-ship missile into the Red Sea, according to multiple defense officials, a move that comes the same day the Houthi leader rejected the Trump administration's proposal for a ceasefire aimed at ending the civil war.
Yemen's National Army has advanced further into several Houthi-controlled neighborhoods in Hodeidah, forcing insurgents to flee to the city center, using residents as human shields and their houses as military bases, a military source told Asharq Al-Awsat on Friday.
At least 23 civilians have been confirmed dead in the governorate since 24 October, but the total death toll is believed to be much higher.
Dozens of wounded rebels were transferred to hospitals in the provinces of Sanaa and Ibb, further inland, a source at the Hodeida military hospital said.
The move came as warplanes pounded the key strategic port city of Hodeida and after Washington's support for the campaign was placed under increased scrutiny following the brazen murder of dissident journalist Jamal Khashoggi by a Saudi intelligence team.
United Nations bodies warn that an all-out attack on the Red Sea port, an entry point for 80 percent of Yemen's food imports and aid relief, could trigger a starvation in the impoverished country.
The Saudi's move followed a report in the Washington Post that the USA was to stop refuelling aircraft from the Saudi-led coalition, amidst ongoing worldwide outcry over Riyadh's actions in Yemen, particularly after a series of coalition strikes in which scores of civilians, including several children, were killed.
Both parties in the Yemen conflict stand accused of acts that could amount to war crimes.
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Saudi Arabia and its allies intervened in Yemen in 2015 to support President Abdu Rabu Mansour Hadi's government after Houthi rebels ousted it and took swaths of territory including the capital, Sana.
Mariam Aldogani, Save the Children's field co-ordinator in Yemen, said that the people in Hodeidah are living in a "state of fear".
US officials, speaking on condition of anonymity Friday to discuss the decision before its announcement, said the end of refueling wouldn't stop American training and military assistance. The Pentagon was refuelling about 20 per cent of coalition planes flying sorties over Yemen.
The refueling change does not affect the US military assistance and training to improve the Saudi airstrikes, which have reportedly caused thousands of civilian deaths.
It also said it hoped upcoming United Nations sponsored talks "in a third country" would help end the war.
US lawmakers ratcheted up pressure on the administration in recent days to halt the practice as a way of curtailing USA involvement in what the United Nations has called the world's worst humanitarian crisis.
US Secretary of Defence James Mattis announced that the Pentagon-backed Saudi Arabia's decision to use the Saudi-led coalition's own military capabilities to refuel aircraft engaged in Yemen.
The battle for Hodeidah, located on the Red Sea coast, threatens to be one of the bloodiest of the three-year war, and could have devastating consequences for Yemen's beleaguered population.