GENEVA, September 8 (Reuters) – Disruptions in the Strait of Hormuz can push small and medium-sized enterprises away from global supply chains, increasing economic concentration and weakening the resilience of international trade, UNCTAD said on Tuesday.
Rising energy bills, freight rates, insurance premiums, and financing restrictions caused by the conflict between the United States and Iran impose heavier burdens on small and medium-sized enterprises (SMEs) than on large firms, leaving them more vulnerable than large corporations, which can diversify suppliers, markets, and sources of financing.
SMEs account for about 90% of global enterprises, 70% of employment, and 50% of world GDP, according to the report, meaning that disruptions risk triggering ripple effects far beyond maritime routes.
For months, markets have been shaken by the conflict in the Middle East, which has caused major disruptions to maritime transport through the Strait of Hormuz, the strategic waterway between Iran and Oman through which a substantial portion of global oil trade normally passes.
After a month of lull in August, clashes in the Persian Gulf resumed, pushing global oil prices back to levels not seen since July. Brent crude oil prices were up more than 2% on Tuesday, surpassing $99 a barrel.
Houthi attacks in southwestern Saudi Arabia have the potential to worsen the economic impact of the conflict by interrupting the Middle East’s energy supply beyond the Strait of Hormuz.
UNCTAD warned that the disruption could cause an “SMEs exclusion effect,” in which smaller companies may be forced to cut production, delay investments, or drop out of value chains altogether, even if overall trade volumes end up improving.
“The risk is not only that trade slows globally. It is that smaller companies could be effectively excluded from value chains, even when global trade begins to recover,” said UNCTAD spokesperson Marcelo RISi.
UNCTAD said that the recent shocks have already manifested in higher crude oil prices, lower volumes of maritime traffic, and rising financing costs, weighing particularly on SMEs, which already face relatively higher operating costs, such as electricity and compliance with import standards, than larger firms.
