Saudi Arabia heads a coalition of Gulf states fighting Houthi rebels backed by Iran in a conflict that started in March 2015 and has cost the lives to more than 7,000 people.
The US's announcement was made as Syrian President Bashar al-Assad's army, backed by Russian air power, captured the last rebel districts in the city of Aleppo at huge human cost.
It also came just over a month before Donald Trump was due to take over the US presidency from incumbent Barack Obama.
The White House announced a review of “the kind of assistance that the United States provides the Saudis to undertake” its war effort in Yemen and a senior administration official quoted by the French Press Agency said that the US administration “decided to not move forward with some foreign military sales cases for munitions."
"This reflects our continued, strong concerns with the flaws in the coalition's targeting practices and overall prosecution of the air campaign in Yemen," the source said.
Analysts see the move as a direct criticism of the Saudi war efforts.
“I regard it first and foremost as an effort by the Obama White House to send a signal to the Saudis that the concern with the targeting in the Yemen war is serious,” says Rosemary Hollis, a professor of international politics City University of London.
“And that the promise of internal inquiries and the claims that they are not deliberately doing this and that they are being as careful as they can, and that others are responsible are inadequate for the White House concerns.
The Obama administration's concern is partly moral but there are practical implications, too, she argued, "because the Saudis do not have a convincing strategy to win in Yemen".
Worsening US-Saudi relations
Even if the move does not mean that all US military support to Saudi Arabia will stop, it is another sign of a deteriorating relationship.
Reactions in the Gulf were not positive, especially because the White House announcement comes just months after Congress adopted a law that allowed US citizens to sue Saudi Arabia for alleged direct involvement in the 9/11 terrorist attacks.
“This is surprising to many of us,” says professor Abdelkhaleq Abdaullah, a political observer living in the United Arab Emirates. “There is this anti-Saudi Arabia manifestation in Washington, in America. Most of it is not justified.
"There is this campaign against Saudi Arabia, and we don't know where it is coming from, but it is really not a campaign that values a 60-year-old relationship and does not value the role Saudi Arabia has and is playing to stabilise the region and is not an attitude that fits Saudi Arabia that is a partner in the world in the war against ISIS [the Islamic State armed group] and against terrorist organisations."
The new US government will come as a welcome change to many in the Gulf, Abdaullah says.
“Everybody is happy that the Obama era is over. And everybody here thinks that Obama had a tilt towards Iran and he had all these views about a moderate Iran, that is part of his own illusion about Iran and it seems that he doesn't know Iran as good as we do, the countries that are so close to Iran."
Others think that Obama is working on his post-presidential legacy.
“The positioning of the Americans is to put principal blame on others for the loss of life amongst civilians,” says Hollis.
“It won't do the Americans much good, their reputation in the region is already miserable and they are seen as complicit in Saudi actions in Yemen. I think coming on the back of the horrors of Aleppo you see an effort by the Americans to put some distance between themselves and the consequences of the Saudi strategy in Yemen, even if they agreed with the original goals of that strategy."