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What History Tells Business Owners About Oil Shocks (And What It Doesn't)
The Strait of Hormuz has been effectively closed for thirteen days. Tanker traffic is down roughly 90% from pre-conflict levels, with over 150 vessels anchored outside the strait rather than risk transit. Brent crude is just around $102. Nobody—not the banks, not the energy analysts, not the geopolitical consultants—knows how this resolves or when.
What we do have is a historical record of how prior energy shocks played out, a clear-eyed read of how 2026 compares to those precedents, and a set of best practices that hold regardless of how the scenario develops.
History is Data: We've Seen (Versions of) This Before
Every generation of business owners has faced a moment when an energy shock felt existential. Here's how the historical record looks, laid against 2026:
Suez Crisis (1956):
Arab Oil Embargo (1973):
Gulf War / Iraq-Kuwait (1990–91):
Iran/Hormuz (2026):
The pattern across those prior shocks is: a sharp price spike, followed by period of economic disruption, and eventual resolution. Markets did not cease to function. Deals did not permanently stop. That is what we can say judging by the historical record. What we cannot say is whether that pattern repeats in 2026, on what timeline, or at what cost.
We can say, though, that the 2026 Iran War is structurally different from its predecessors in some important ways. According to Rapidan Energy Group, the current disruption affects roughly double the share of global supply removed during the Suez Crisis, and nearly triple that of the 1973 embargo. Unlike Suez, there are no meaningful rerouting alternatives at scale: the combined capacity of Saudi Arabia's East-West pipeline and the UAE's Habshan-Fujairah pipeline can bypass only roughly 6–6.5 million barrels per day at full capacity compared to roughly 17–20 million barrels per day that normally transit Hormuz. Also, unlike any prior crisis, this disruption hits oil and LNG simultaneously. Qatar's LNG, for example, exports transit through Hormuz, and there are no alternative routes for natural gas.
What This Means Owners
Before the conflict, the 2026 lower middle market was setting itself up to be an active environment for sellers. Financing conditions had improved, antitrust enforcement had normalized, and private equity was sitting on significant undeployed capital with real pressure to put it to work.
That backdrop hasn't disappeared. What has changed is the variable buyers are now stress-testing alongside everything else. Analysis from Chatham House argues that if the conflict is short-lived and no lasting damage is done to energy infrastructure, the economic impact on advanced economies may be modest, but that a prolonged disruption lasting several months could push oil to $130/bbl before any decline.
Unless you're in oil and gas, the Hormuz disruption likely doesn't hit your income statement directly. But it may very well transmit itself through freight surcharges, input cost inflation, and downstream customer pressure. Global oil prices have already surged more than 25% since the start of the war, driving up fuel costs for businesses worldwide. Brent futures are pushing $99 per barrel at the time of this writing, and analysts at Rystad Energy are warning that prices could climb to $135 if conditions persist for four months or more. The IEA agreed to release 400 million barrels from strategic stockpiles—the largest emergency release in history—to cushion the market.
But these are buffers, not solutions.
Best Practices
What follows are practices that have historically helped operators navigate uncertainty, both generalized ones that apply broadly and sector-specific ones that apply where oil's role in your cost structure is more direct. Your job is to assess how they apply to your specific situation.
For Every Business, Regardless of Sector
Know your own numbers cold. If you can't model your EBITDA under a sustained $110/bbl environment in 48 hours, that's a gap — not because we know oil stays there, but because buyers will run it. You want to have already had that conversation with yourself.
Clean up your financial presentation now. Regardless of market conditions, a normalized 36-month P&L and a credible Quality of Earnings analysis is table stakes for any serious process. In a volatile environment, buyers tend to scrutinize earnings quality more carefully, not less.
Stress-test your covenants. If your debt has maintenance covenants, know exactly where you stand under an adverse scenario. Discovering this in a lender call is worse than discovering it now.
Reduce visible owner dependency. This was good advice before the conflict. Documented processes and a capable management team reduce buyer risk perception in any environment.
Audit your customer concentration. High single-customer dependence above roughly 20% of revenue is a valuation risk in calm markets and a larger one in uncertain ones. Know your number.
If Your Business Has Material Oil Exposure (Manufacturing, Logistics, Distribution)
The more directly petrochemical feedstocks, freight rates, or diesel costs flow through your P&L, the more this event is relevant to your specific business.
Identify the specific line items where energy costs transmit into your cost structure. Generic "supply chain risk" language will not satisfy a buyer's diligence team. If you have pricing power, document the evidence: price increases taken, customer acceptance rates, contractual pass-through language. This is the most direct offset to an input cost narrative. Model freight as a variable cost line, not a fixed one.
If Your Business Has Indirect Exposure (CRE, Healthcare, Telecoms)
Your exposure is real but attenuated, which can be a positioning asset if you frame it correctly.
For commercial real estate: construction cost inflation is immediate and real. If you're mid-development, update your pro formas. Tenant stress in retail and office under higher consumer energy costs deserves a scenario, even if you think it's unlikely. For healthcare: document reimbursement stability. It's one of the few genuine insulators in an energy shock, and buyers will find it reassuring if you surface it proactively. For telecoms: diesel and field service fuel exposure should be quantified, particularly if you have rural-heavy operations.
The Bottom Line
We've seen energy shocks before. This one is larger in immediate scope than any event in the historical record. There is more oil and gas supply offline and fewer rerouting alternatives available in the region than ever. What that means for the ultimate economic outcome is genuinely unknown.
What the historical record does tell us is that operators who understood their own exposure, prepared their financials, and ran clean processes navigated these environments better than those who either panicked or waited for certainty before acting. Certainty didn't come in 1973. It didn't come in 1991. It won't come now.
Don't panic. Know your numbers. Apply best practices with judgment. That's the whole playbook.
Black Diamond Capital Advisory serves lower middle market owners across manufacturing, commercial real estate, healthcare, telecoms, B2B services, and beyond. If you'd like to discuss how this environment impacts your specific situation, reach out directly here.
