Key facts
- Disruptions in the Strait of Hormuz risk pushing small and medium-sized enterprises (SMEs) out of global supply chains.
- SMEs face higher energy, freight, insurance, and financing costs due to the conflict.
- SMEs represent 90% of global businesses, 70% of employment, and 50% of global GDP.
- Fighting in the Gulf has caused oil prices to rise above $99 a barrel.
- UNCTAD warned of an 'SME exclusion effect' where smaller companies could exit value chains.
Disruptions in the Strait of Hormuz, a critical waterway for global oil trade, are disproportionately impacting small and medium-sized businesses (SMEs), potentially pushing them out of global supply chains, according to the United Nations Conference on Trade and Development (UNCTAD).
The conflict in the Middle East, including intensified fighting involving Iran-backed Houthis in Yemen, strikes on Saudi Arabian cities, and actions between American forces and Iran, has led to increased energy bills, freight rates, insurance premiums, and financing constraints. These rising costs place a heavier burden on SMEs compared to larger corporations, which have greater capacity to diversify suppliers, markets, and funding.
UNCTAD highlighted that SMEs constitute approximately 90% of global businesses, provide 70% of employment, and contribute 50% of world GDP. The agency warned of an "SME exclusion effect," where smaller companies might be forced to scale back production, delay investments, or exit value chains entirely, even as overall trade volumes eventually recover.
Recent shocks have already manifested in higher crude oil prices, reduced shipping transit volumes through the Strait of Hormuz and Bab el-Mandeb, and increased borrowing costs, all of which weigh heavily on SMEs that already face higher relative operating expenses. UNCTAD spokesperson Marcelo Risi emphasized the risk of smaller firms being excluded from value chains during trade recovery periods.