Six weeks into the conflict with Iran, the closure of the Strait of Hormuz has choked off roughly 20 percent of the world’s oil supply, with prices surging, at times, beyond $100 a barrel. U.S. gasoline now averages near $4 a gallon in many areas, and the ripple effects are already showing up in higher operating costs for small businesses across the country.
Although domestic U.S. oil production is benefiting from the higher global prices and allowing for increased exports, oil is priced on international markets, so the shutdown in the Arabian Gulf still drives up costs at the pump for American businesses and consumers.
Ben Johnston, chief operating officer at Kapitus, a leading small business financing firm, has been tracking these developments closely. Kapitus works with thousands of small companies on everything from working capital to equipment loans, and Johnston says the current volatility is forcing owners to rethink margins, hiring and long-term strategy.
Small businesses learned how to navigate tariffs over the past year, but this oil spike adds another layer of pain that many are still figuring out
Johnston said in insights shared with Military.com. He outlined the main pressure points and practical steps owners can take to stay resilient.
Strait Closure Disrupts Energy and Supply Chains
The war has effectively shut down oil and gas production in the Gulf region, with actions that cannot be reversed quickly. Nearly all Arabian Gulf exports must pass through the narrow strait, and the disruption is expected to last weeks or months until hostilities ease and shipping resumes at scale.
For small businesses, this means immediate hits to energy prices, fuel for transportation and raw material costs. Trucking fleets, delivery services and manufacturers that rely on diesel or natural gas feedstocks are feeling it first. Small operators, which make up the vast majority of U.S. trucking companies, lack the hedging tools or scale that larger firms use to blunt the blow.
Fuel Volatility Squeezes Margins and Delays Hiring
Rising oil prices act as another shock to already thin operating margins. Many small businesses are still navigating the market changes due to tariffs, the lasting effects of inflation, and elevated interest rates. With oil hovering around $100 a barrel, owners face tough choices: absorb the higher costs, pass them along to customers or watch demand soften.
Johnston expects most will try some combination of the three, but uncertainty over how long the price spike will last is causing many to retrench. New hires get delayed, capital investments are put on hold and expansion plans are shelved. The result could potentially show up in slower job growth and softer overall GDP numbers in the coming months.
Lesser-Known Impacts Extend Beyond Fuel
The effects reach further than the gas pump. Oil and gas-producing states also supply key materials for global agriculture and manufacturing, including fertilizer, helium used in semiconductors, aluminum, steel and concrete. Europe and Asia, which depend heavily on Arabian Gulf energy, could see shortages that tighten supply chains worldwide.
U.S. manufacturers may actually gain a relative advantage here.
Domestic petroleum supplies remain more stable and affordable, which could encourage some companies to accelerate bringing production back stateside. Construction firms, meanwhile, might see higher prices for building materials but also new opportunities if upstream and downstream oil and gas projects become more economically viable over the long term.
Transportation, Agriculture and Manufacturing Face the Biggest Hits
The transportation sector stands out as one of the most exposed. Long-haul trucking and local delivery services count fuel as a primary operating expense. Agriculture feels the pain through diesel-powered machinery and sharply higher fertilizer prices needed for crop yields.
Manufacturers using electricity-intensive processes or raw materials derived from petroleum, such as plastics, aluminum and steel, will see costs climb across the board.
On the positive side, heavy machinery used in construction and petroleum production could benefit from sustained higher prices, giving some small businesses in those upstream and downstream segments a lift if the disruption persists long enough to make new projects pencil out.
Johnston notes that the United States is less exposed overall than many developed economies in Europe and Asia, which could speed up the repatriation of manufacturing during this period of uncertainty.
Financial Strategies to Build Resilience
Small business owners have learned from past crises the value of tight margin management, diversified supply chains and careful control of the cost of goods sold. Johnston advises developing multiple supplier options and investing in automation and artificial intelligence tools that reduce reliance on human labor while tightening control over inventory and customer data.
Many businesses are already using AI for accounting, analytics and even sales forecasting. On the financing side, he recommends maintaining relationships with both bank and non-bank lenders. Having multiple sources of working capital provides a buffer when credit conditions tighten. Revolving lines of credit become especially important for handling month-to-month cash flow swings caused by volatile fuel prices.
Conflict Could Tighten Lending Conditions
Uncertainty in the broader economy typically pushes lenders to raise rates and tighten standards. Higher oil prices reduce business margins and consumer discretionary spending, which in turn makes lenders more cautious. Small businesses that depend on consumer revenue may see slower sales as families cut back on non-essential purchases to offset higher gas and heating costs.
Johnston stresses the importance of keeping a full suite of financing products available. He stated:
It is important for small businesses to maintain both bank and non-bank relationships to ensure access to a full suite of financial products
Owners who act now to line up flexible funding options will be better positioned when the market reacts to prolonged economic pressure.
The Iran conflict continues to evolve, and its economic fallout will test small businesses in ways that go beyond the immediate fuel price surge. For veteran entrepreneurs and military families who run or work in these companies, the stakes are personal. Many service members transition into small business ownership precisely because it offers independence and the chance to build something lasting.
Those owners who manage supply chains aggressively, invest in productivity tools and keep capital access open stand the best chance of weathering the storm. The next few months will separate businesses that adapt quickly from those that do not.
For more on the broader strategic picture of the conflict, see Military.com’s previous reporting on North Korea’s role in arming Iran’s war effort. For ongoing coverage, visit Military.com’s Operation Epic Fury portal.
