The impact of international conflicts on UK small businesses and energy bills

When international conflicts make the headlines, they can often seem far removed from daily life in the UK. Yet events thousands of miles away can quickly affect energy prices, business costs and household finances. The disruption to shipping through the Strait of Hormuz during 2026 is a clear example of how global events can create local challenges for British businesses and consumers.

Why does the Strait of Hormuz matter?

The Strait of Hormuz is one of the world's most important energy shipping routes, carrying around 20% of global oil and liquefied natural gas (LNG) exports. When tensions in the region escalated earlier this year, concerns over supply shortages pushed global energy prices higher.

Although the UK imports only a limited amount of energy directly from the Gulf region, energy markets are global. Any reduction in supply can increase wholesale prices across Europe, including the UK. 

The effect on energy bills

One of the biggest impacts has been the rise in wholesale gas prices. UK gas prices climbed to around 185 pence per therm, reaching levels not seen since the energy market volatility of 2023. As gas remains a key fuel for electricity generation, rising gas costs have also pushed electricity prices higher. 

These increases have filtered through to households. The domestic energy price cap rose during 2026, with a further 4% increase from October, taking a typical annual household energy bill to approximately £1,723 per year. 

What it means for small businesses

Small businesses are often among the most exposed to rising energy costs because they have less capacity to absorb sudden increases in operating expenses.

Manufacturing

Energy-intensive sectors such as food production, engineering and construction materials have faced higher electricity and gas costs, putting pressure on profit margins. 

Hospitality

Restaurants, pubs, cafés and hotels have been hit by higher utility bills while also facing increased food and transport costs. For businesses operating on tight margins, even small cost increases can make a significant difference. 

Retail

Retailers have faced a double challenge. Operating costs have increased, while customers often have less disposable income as household energy bills rise. This can reduce spending on non-essential goods and services. 

Transport and Logistics

Higher oil prices have increased fuel costs for delivery companies, logistics providers and businesses operating vehicle fleets. As Brent crude prices surged during the crisis, diesel costs also rose significantly. 

A real-world example

Consider a small regional bakery with five locations across the Midlands. The business has no direct suppliers in the Middle East, yet it still experienced:

• Higher electricity costs for ovens and refrigeration.
• Increased fuel costs for delivery vehicles.
• Rising supplier costs due to transport expenses.
• Reduced customer spending as household budgets came under pressure.

Customer numbers remained stable, but profitability declined because operating costs increased across multiple areas of the business. 

Looking ahead

While shipping activity through the Strait of Hormuz has partly recovered, energy markets remain sensitive to geopolitical developments. Analysts continue to warn that uncertainty could persist if regional tensions remain unresolved. As a result, businesses should focus on:

• Improving energy efficiency.
• Monitoring market conditions.
• Managing operational costs.
• Building financial resilience.

Businesses that understand how global events influence local energy markets are often better prepared to navigate periods of uncertainty. 

Conclusion

The events of 2026 have shown that international conflicts can have a direct impact on UK small businesses and households. Rising energy prices, higher transport costs and reduced consumer spending can all stem from disruptions far beyond Britain's borders. In an increasingly interconnected world, understanding these risks is becoming an essential part of running a resilient business.