Abed Mansour Hadi agrees power-sharing role that will dilute his powers, after he was ousted from his palace in Sana’a

Yemen’s president Abed Mansour Hadi has yielded to the demands of Houthi gunmen who over ran the capital Sana’a, agreeing to a power-sharing role that will dilute his powers and give the rebels a strident voice in state affairs.

After being ousted from his palace, then besieged in his home for 24 hours, Hadi agreed to all the Houthis’ demands, state media reported. In return, the rebels will withdraw from all government facilities they seized, including military bases and tv stations. They will also free Hadi’s aide who was captured over the weekend.

The deal amounts to a capitulation for the embattled leader, who will no longer have full authority to assign the entire government, or to make executive decisions without the input of the Houthis.

A senior Houthi official welcomed the compromise but warned that deadlines had been breached when previous deals had been struck over the past three months. “This deal specifies a two week grace period to implement the core of what was agreed upon and we will be watching up close to see whether the government is serious or not this time,” a member of the Houthi political council told the Guardian.

Rebels had earlier on Wednesday entered Hadi’s home three times, trying to force concessions that would consolidate their hold on power in Sana’a. Gulf States joined Yemeni officials in denouncing the Houthi moves as a coup and said they would do ‘whatever it takes’ defend Hadi’s leadership.

The Houthis, who represent a minority Shia population in Yemen, seized a missile base on Wednesday. The rebels had effective control over much of the country’s military, which watched on earlier in the week as the rebels battled briefly with presidential guards.

Houthi officials had earlier said they would rather partner with Hadi than oust him. Such a stance aims to make Hadi a client of a new Houthi-led power base, which had been flexing its muscles ever since rebels rode into Sana’a last September demanding a greater say in how the state is run.

“We will not remove the president from power,” said Abdullah Shaban, a senior Houthi leader in Sana’a. “He is the president of Yemen but its our duty to ensure that he is not involved in corruption and involves all political factions in the decision making. He will remain as long as he wishes to.

“I advised the president last month to take the Houthi threat seriously but his advisors led him to the hole he is in now. We will not stop putting pressure until the demands of the Yemeni people are met.”

A senior UAE official in Sana’a confirmed that Gulf states were considering shutting their missions in Sana’a to protest developments.

“Our government is currently studying the possibility of closing the United Arab Emirates embassy in Yemen,” the official said. “We downsized our staff months ago and we are keeping a close eye on the developments. We will close the embassy as soon as we are given orders.”

On the streets of the capital, Ali Allanah, a fruit vendor located near the president’s residence said Hadi had no option but to step down. “Hadi is not the president anymore,” he said. “He can’t take care of himself let alone a country. “We only asked the president for security, thats all, and he couldn’t even grant us that.”

Another local man, who fled Sana’a during clashes on Tuesday and is now scared to return said: “Its not secure for me to be in the house, but it is lawless [in Sana’a] and if militants are told my house is empty they would use it to attack government forces.”

“My family is terrified and I cannot allow them to comeback to Sana’a until a deal is reached between both clashing sides. When is that going to be? I don’t know.”

Authorities in Yemen’s southern port city of Aden closed all land, sea and airports on Wednesday raising fears that instability could spread to other regions of the volatile country.

Oil production in Yemen’s most strategic oil province of Shabwa was halted on Saturday and fuel shortages are leading to long queues outside of petrol stations across the country.

Yemen has been racked by political turmoil for much of the past four years, since an uprising, inspired by revolutions in Tunisia, Egypt and Bahrain, rumbled through the Middle East’s poorest nation.

The revolt eventually led to the ousting of Ali Abdullah Saleh, who had led the country for four decades. Saleh is believed to be close to the Houthi rebels. Yemen is also battling a Sunni insurgency, with al-Qaida in the Arabian Peninsula remaining a potent threat in rural areas. The terror group is also active outside of the country, with the Charlie Hebdo killers boasting of carrying out the massacre in Paris earlier this month in its name.