The United States says it will consider revoking its recent terrorist designation of Yemen’s Houthis if Iran-backed militants halt shipping attacks in and around the Red Sea.

“I hope we can find a diplomatic exit,” Tim Lenderking, President Joe Biden’s special envoy to Yemen, told reporters during an online news conference on Wednesday. “Finding ways to de-escalate the situation so that we can ultimately withdraw the designation and of course end military strikes against the Houthi military capabilities.”

The comments showed Washington is once again relying on diplomacy after nearly three months of airstrikes against Houthi rebel facilities in Yemen. Those actions failed to stop the group from conducting missile and drone attacks on merchant ships and warships, although the United States said it had successfully reduced the Houthis’ military capabilities.

Asked by Bloomberg News after the briefing whether the U.S. was offering the Houthis a quid pro quo to end attacks on ships in exchange for revoking the designation, Lenderking said: “We will certainly look at that, but we don’t think It’s something that happens automatically.”

In mid-January, the U.S. State Department announced that Ansarallah, commonly known as the Houthis, was designated a Specially Designated Terrorist Organization. This comes shortly after the United States and Britain began a joint campaign against shipping attacks.

The Islamist group Houthis began attacking ships in the Red Sea and Gulf of Aden in mid-November, ostensibly to pressure Israel to end its war against Hamas in Gaza. Most Western shipping lines now avoid waterways, which typically account for about 30% of global container traffic. Instead, they sent ships around the southern tip of Africa, a longer route for ships between Asia and Europe.

Yemeni militants say they are determined to continue carrying out attacks. Last month, they killed three crew members on a commodities carrier and sank another ship.

Lenderking spoke to reporters in Muscat, the capital of Oman. Oman hosts some Houthi leaders and has long served as a mediator between the group and Western powers. The U.S. envoy said he held talks with Omani Foreign Minister Said Badr al-Bousaidi following discussions with Saudi Arabian officials the previous day.

“We discussed steps to ensure the de-escalation of the Houthis and renewed our focus on ensuring peace for the Yemeni people,” he told reporters.

He said the Houthis could “show good faith” and “an intention to de-escalate tensions” if they released the 25 crew members of a ship called the Galaxy Leader they hijacked in November. The car carrier was chartered by Nippon Yusen Kaisha Co., Ltd.

Lenderking said the Houthis’ de-escalation could help restart U.N.-brokered peace talks in Yemen, which have been frozen since October 7. The country has been mired in civil war for a decade, although a tenuous truce has been in place since 2022.

The Houthis captured the capital Sanaa when the war broke out in 2014 and now control the key Red Sea port of Hodeidah.

Saudi Arabia initially sought to oust the Houthis and now hopes to enforce a ceasefire it reached with the group last year.