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Accounting & Finance
11. May 2026
Benedikt Imbusch / Julius Averdiek

The Iran War as a global disruptive factor - Consequences for German small and medium-sized enterprises (SMEs)

With the outbreak of the Iran War at the end of February 2026, geopolitical uncertainty intensified noticeably worldwide. For a strongly export-oriented economy, like Germany, this has given rise to new risks that, in the short term, will be putting not just marginal but also structural pressures on companies - particularly on SMEs. While there are only limited direct economic ties with the crisis-hit region, nevertheless rising energy and transport costs, longer delivery times as well as a generally gloomy economic outlook are having a direct impact on cost and liquidity structures, planning security and investment decisions.

Energy costs are exerting pressure on margins and prices

In Germany, industrial energy consumption is strongly characterised by fossil fuels - oil and gas still account for approximately 40% of the total. Despite this structural dependency, no supply bottlenecks are expected in the short term. In 2025, just 6.1% of Germany’s crude oil imports came from the Middle East, while no liquefied natural gas (LNG) whatsoever was sourced directly from the region during this period. Despite this low direct dependency, the war in Iran is driving oil and gas prices higher on the world market and, thus, in Germany too. Prior to the start of the war, the price of diesel was still around €1.75 per litre and within about six weeks it increased, in some cases, to above €2.40. In Germany, the squeeze from rising energy prices is being particularly felt by SMEs because they frequently rely on their own vehicle fleets and tight supply chains.

Interim conclusions

For many SMEs the higher costs mean not only a direct strain on their operating expenses, but also increasing pressure on the prices for their products and services. One consequence of this is deteriorating operating margins and an immediate need to adjust prices - this is however associated with competitive risks.

Liquidity drain due to increased transport costs and longer delivery times

Apart from driving up oil and gas prices, the war in Iran is also having a significant impact on German imports because, every year, almost 10% of them go through the Red Sea route. Within just a short time, the logistics industry has already adjusted some of its routes and is now using longer seaways. Air freight structures have likewise been directly affected. The partial closure of airspace in the region is curtailing important trade routes between Asia, the Middle East and Europe. This results in longer delivery times for imports and exports because more time is needed for both sea as well as air transport on account of the detours. Furthermore, transport costs are going up due to the higher fuel requirement for the longer routes, rising energy prices as well as the additional insurance cover owing to the uncertain situation. One consequence, among others, is the drain on liquidity, particularly for companies without a large inventory buffer or financial cushion.

Outlook

In the medium term, however, it is not only increased transport times and costs in the logistics sector that are anticipated. Asia - in particular China - relies heavily on the Strait of Hormuz, which connects the Persian Gulf with the Gulf of Oman. Consequently, there could also soon be price increases for imported intermediate products or even shortages of high-tech and industrial goods. This would have associated (indirect) repercussions for German SMEs that do not have direct supply relationships in the affected region.

Implications of the deterioration of economic prospects

The preliminary figures published by the Federal Statistical Office corroborate the consequences of the Iran War that have already been mentioned. For March 2026, it is anticipated that inflation will be +2.7% when compared with the same month in the previous year, while this would correspond to an increase of 1.1% when compared with February 2026. Energy prices actually rose by 7.2% compared with the same month a year ago. Apart from rising production costs, the reduction in household purchasing power is thus also likely to have an impact on German SMEs. Economic research institutes have confirmed this assumption through their economic growth forecasts for the current and subsequent years. While just a few months ago growth of 1.3% was still projected for 2026, most recently the forecast has been revised down to 0.6%. The ifo Institute has also lowered its forecast for 2027 by 0.5 percentage points to 0.9%.

Financial and planning risks: While large corporate groups generally have more financial security, SMEs in particular are increasingly coming under pressure in the wake of the aforementioned developments. Not only do they have to bear higher costs, but they also have to respond more flexibly to fluctuations in demand, which significantly restricts their planning security and hampers investment decisions.

Conclusion and recommendations for action

The Iran war is putting a strain on the German SMEs, primarily because of rising energy and transport costs as well as supply chain disruptions; moreover, as a direct consequence of the war, the squeeze on costs and margins is intensifying. At the same time, inflation and lower growth expectations are creating demand risks and reducing planning security.  

Companies should regularly review their cost and margin structures, actively manage liquidity and analyse their supply chains with respect to dependencies. Furthermore, investments must be better protected and planning processes need to made more flexible. Here, professional advice can provide valuable support by creating transparency and assessing risks and thus safeguarding the economic capacity to act.