Understanding the Implications of the Strait of Hormuz Closure for UK Businesses

The potential closure of the Strait of Hormuz continues to raise concerns for businesses across the UK. While the geopolitical tensions remain complex, the commercial impact is becoming increasingly clear. Rising fuel prices, supply chain disruption, and operational uncertainty could affect businesses of every size.

Members of our Commercial and Commercial Property teams recently attended a Devon Chamber of Commerce session discussing the economic impact of disruption in the Strait of Hormuz. The discussion highlighted how international instability can quickly affect UK businesses, suppliers and consumers.

This article explains the possible short-term and long-term business risks, alongside practical legal steps businesses can take to protect themselves.

What Is the Strait of Hormuz and Why Does It Matter?

The Strait of Hormuz is one of the world’s most important shipping routes. Around 25% of global seaborne oil passes through this narrow channel, alongside significant volumes of liquefied natural gas, chemicals, and fertilisers.

When disruption occurs in the region, global energy markets often react immediately. Businesses and consumers usually see the effects through rising fuel and transport costs.

For UK businesses, the consequences may include:

• Increased energy costs
• Higher transport expenses
• Delays within supply chains
• Reduced business confidence
• Pressure on profit margins

These issues can quickly affect day-to-day operations, especially for businesses that rely heavily on imported goods, manufacturing, logistics, or fuel-intensive services.

Short-Term Impacts on UK Businesses

Many UK businesses may already be experiencing the early effects of ongoing disruption in the Strait of Hormuz.

Rising Operational Costs

Higher oil prices often increase fuel and energy costs. Businesses with significant transport or manufacturing expenses may feel the impact first.

Companies may also experience increased costs from suppliers passing on their own rising expenses. This can place pressure on existing contracts and commercial relationships.

Supply Chain Disruption

Global instability can disrupt international shipping routes and supplier operations. Delays in deliveries may create uncertainty for businesses trying to manage stock levels, pricing, and customer expectations.

Supply chain disruption can make forward planning more difficult, particularly for businesses operating with tight margins.

Delayed Investment and Reduced Consumer Spending

Periods of economic uncertainty often affect business and consumer confidence.

Some businesses may delay investment decisions until markets stabilise. Consumers may also reduce discretionary spending, particularly within sectors such as:

• Tourism
• Hospitality
• Travel services
• Retail

For many businesses, this combination of rising costs and reduced demand can create significant commercial pressure.

Long-Term Risks if Disruption Continues

If disruption within the Strait of Hormuz continues for six to twelve months or longer, the impact may spread further across the UK economy.

Several sectors remain particularly vulnerable due to their reliance on oil, chemicals, and international supply chains.

Manufacturing and Construction

Rising costs for metals, chemicals, and plastics could affect manufacturers and construction companies.

Businesses may experience:

• Delays in raw material supply
• Increased production costs
• Reduced supplier reliability
• Contractual disputes over pricing and delivery

Agriculture and Food Production

Fertiliser shortages or increased costs could affect agricultural production and food supply chains.

This may lead to higher operating costs for food producers, distributors, and retailers.

Increased Government Intervention

There has also been discussion surrounding possible government intervention under the Energy Act 1976. This could include emergency fuel rationing measures or prioritisation for essential services.

At present, it remains unclear how these measures could affect SMEs or non-essential commercial sectors.

What Should UK Businesses Do Now?

Businesses that prepare early are often better placed to manage disruption and remain commercially resilient.

Reviewing contracts and commercial arrangements now may help reduce future legal and financial risks.

Review Your Commercial Contracts

Businesses should review key contractual terms carefully, including:

• Pricing clauses
• Escalation clauses
• Force majeure clauses
• Hardship provisions
• Variation clauses
• Termination rights

Many businesses updated force majeure clauses following the COVID-19 pandemic. However, older contracts may still lack sufficient protection against global disruption or major supply chain issues.

Understanding whether you can lawfully increase prices or terminate supplier arrangements is essential.

Assess Supply Chain Risks

Businesses should also assess supply chain dependencies and identify alternative suppliers where possible.

Key considerations include:

• Supplier reliability
• Geographic concentration risks
• Alternative sourcing options
• Contingency planning
• Contract exit provisions

Diversifying suppliers may help reduce exposure to international disruption and price volatility.

Stress-Test Existing Commercial Arrangements

Businesses should consider “what if?” scenarios to assess potential risks.

For example:

• What happens if fuel prices rise significantly?
• What happens if supply routes become unavailable?
• What happens if suppliers cannot deliver materials?

Stress-testing commercial arrangements can help businesses identify weaknesses before problems escalate.

Review Pricing Strategies Carefully

Many businesses may need to reassess pricing models in response to increased costs.

However, businesses must ensure that pricing changes comply with:

• Existing contractual obligations
• Competition law
• Consumer protection rules

Legal advice can help businesses avoid disputes or regulatory issues when updating pricing structures.

How Bright Solicitors Can Help

Taking early legal advice can help businesses minimise risk and strengthen commercial resilience during periods of uncertainty.

Bright Solicitors works with businesses across the South West and throughout the UK to help manage commercial risk, review contracts, and strengthen supply chain arrangements.

Our Commercial team can assist with:

• Contract reviews
• Force majeure clauses
• Supplier agreements
• Pricing disputes
• Commercial resilience planning
• Supply chain risk management

If your business would like advice on protecting commercial arrangements during ongoing market disruption, our team is here to help. Email: info@brightllp.co.uk or call 01752 388883

References:
[1] https://www.iea.org/about/oil-security-and-emergency-response/strait-of-hormuz

[2] Goldman Sachs, Research, Top of Mind, Issue 147, 20 March 2026.

[3] https://www.regit.cars/car-news/uk-petrol-and-diesel-rationing-plans-reviewed-what-a-ps30-limit-could-mean-for-you