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The Strait of Hormuz - a narrow stretch of water off the coast of Iran - might seem a world away from the average UK business. But when geopolitical tensions flare there, the economic ripples can reach our shores faster than you may realise.
With recent developments between the US and Iran raising concerns once again, there’s talk of Iran potentially closing the Strait. This might sound like far-off foreign policy drama, but in real terms, it could impact everything from your fuel bill to your supply chain. Let us explain how.
What is the Strait of Hormuz?
The Strait of Hormuz is a vital shipping route connecting the Persian Gulf with the rest of the world. Around 20% of the world’s oil passes through this narrow corridor - roughly 17 million barrels every day. Countries like Saudi Arabia, Iraq, the UAE and Kuwait rely on it to export oil and gas.
If Iran were to block the Strait - even temporarily- the disruption to global energy markets would be immediate and significant.
Why should businesses care?
At Rowdens, we advise many UK-based owner-managed businesses, and we understand the day-to-day challenges you face. While the Middle East might not be on your radar, oil prices certainly are.
Here’s how a closure could hit closer to home:
1. Rising fuel costs
Oil prices are highly sensitive to supply disruptions. If the flow of oil is reduced due to a blockade, prices could spike. That means:
Higher transport and delivery costs – affecting everything from logistics firms to florists.
Increased utility bills – especially for businesses reliant on oil-based heating or industrial fuels.
Costlier raw materials – especially for manufacturing and construction firms.
2. Supply chain delays
Higher fuel prices and global shipping disruption could delay international deliveries or inflate the cost of imports. Whether you’re sourcing products from Asia or shipping goods across Europe, volatility in oil prices can create knock-on effects across the entire supply chain.
3. Inflation pressure
A spike in oil prices can add to overall inflation, which in turn:
Erodes consumer purchasing power.
Increases overheads.
Can lead to interest rate rises - impacting borrowing and investment plans.
4. Reduced business confidence
When uncertainty looms large in global markets, businesses often pause investment, delay hiring, and tighten cashflow. Even if you aren’t directly affected, your customers or suppliers might be - leading to knock-on delays, late payments or reduced demand.
What can owner-managed businesses do?
While none of us can control global geopolitics, planning and adaptability can help businesses weather these sorts of global shocks. Here are a few practical tips:
Review your cashflow projections – consider scenarios where transport or energy costs increase by 10–20%.
Build resilience into your supply chain – explore alternative suppliers or logistics options.
Monitor your margins – especially if you operate on fixed pricing and are vulnerable to rising input costs.
Speak to your us – forecasting and scenario planning can make the difference between surviving and thriving during uncertain times.
In summary
The potential closure of the Strait of Hormuz is more than a headline - it’s a global economic lever with real implications for UK businesses. At Rowdens, we’re here to help you stay ahead of the curve. Whether you need help forecasting your cashflow, assessing exposure to rising costs, or making strategic decisions for a more resilient future, we’re only a phone call away.
Global disruption is beyond your control - but your response isn’t. Let’s plan for the unexpected, together.
The team at Rowdens - here to offer support
Need support with financial forecasting or business continuity planning? Get in touch with the Rowdens team today.