Hormuz Shipping Disruptions Put Small Businesses at Risk, UN Agency Warns

Ongoing military conflict in the Strait of Hormuz is threatening to push small and medium-sized enterprises (SMEs) out of global supply chains, according to a new report from the United Nations Conference on Trade and Development (UNCTAD). The agency warned on Tuesday that the resulting economic pressures disproportionately harm smaller firms, which are less equipped to handle the shock.

The "SME Exclusion Effect"

UNCTAD highlighted what it calls an “SME exclusion effect,” where smaller companies may be forced to scale back operations, delay investments, or exit value chains entirely, even if overall trade volumes eventually recover. Unlike large corporations that can diversify suppliers and markets, SMEs are more vulnerable to the combination of rising costs.

"The risk is not only that trade slows globally. It is that smaller firms can be really pushed out of the value chains, even when overall trade begins to recover," said UNCTAD spokesperson Marcelo Risi. The report identified several key pressures on these businesses:

• Rising energy bills
• Higher freight rates and insurance premiums
• Tighter financing constraints

Broader Economic Implications

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The potential exclusion of these businesses carries significant weight for the global economy. According to UNCTAD, SMEs represent approximately 90% of all businesses, 70% of employment, and 50% of world GDP.

The agency warned that this widespread impact could create ripple effects far beyond the immediate shipping lanes, leading to increased economic concentration in larger firms and a general weakening of international trade resilience.

Market Impact and Geopolitical Context

The warning comes as renewed conflict in the Middle East roils energy markets. After a period of relative calm in August, fighting between the U.S. and Iran in the Gulf has resumed, directly impacting shipping through the strategic Strait of Hormuz waterway, a chokepoint for a substantial share of global oil trade.

The geopolitical instability sent global oil prices higher on Tuesday. Brent crude futures rose more than 2% to trade above $99 a barrel, a level not seen since July. UNCTAD also noted that Houthi attacks on southwestern Saudi Arabia could further deepen the economic impact by disrupting Middle East energy supplies beyond the blockaded strait.