Energy shock hits business cashflows

Millions of jobs at risk

Strait closure worsens outlook

A sharp rise in global business failures is likely to be triggered by the ongoing US-Israeli war with Iran, new analysis has forecast. Millions of jobs will be threatened as energy and supply chain disruption spreads.

Credit insurer Allianz Trade has warned that the direct toll from the crisis could push up worldwide insolvencies by 6 percent in 2026, 2 percentage points above pre-war expectations. 

That would add nearly 15,000 additional insolvencies across major economies over the next two years – about 7,000 in 2026 and nearly 8,000 in 2027.

But a prolonged stand-off in the Strait of Hormuz could push up the figure to closer to 10 percent in 2026 and 3 percent in 2027.

The conflict, which began on February 28, has destroyed over 80 energy assets across Gulf states, cutting supply and choking oil, gas and trade flows through the strait, which carried one-fifth of global crude supplies. 

Oil has hovered near $100 a barrel and the sudden rise in energy, freight and input costs is squeezing margins, leaving some companies struggling to stay afloat.

“The duration of the conflict is really the single biggest variable driving global impact,” Lluis Dalmau Taules, economist at Allianz Trade for Africa and the Middle East, told AGBI.

“If the strait stays closed beyond summer, we’d [see] materially higher insolvencies worldwide, with the weight falling disproportionately on Europe and parts of Asia.” 

China drives number of insolvencies

Allianz’s report, which covered 44 countries representing about 85 percent of global GDP, does not provide comprehensive global insolvency numbers, instead tracking the difference relative to earlier forecasts. 

Asia will remain the largest contributor to total insolvencies in 2026-27, accounting for 54 percent of the global increase, with China driving the trend as business failures are likely to rise 9 percent in 2026 and a further 5 percent in 2027.

The biggest increases in Allianz’s forecasts are also in developed economies with high sensitivity to oil prices, led by Germany (up 10 percent), the US (up 7 percent) and France (up 4 percent).

Insolvencies in Britain are expected to fall 1 percent in 2026, but remain high overall, roughly 30 percent above pre-Brexit levels.

Separate UK data shows corporate insolvencies rose 7 percent month-on-month in March to 2,022, according to industry body R3.

“Higher fuel and energy prices are putting a financial squeeze on UK businesses,” R3 president Tom Russell said.

The conflict, described by International Energy Agency chief Fatih Birol as the largest market shock in history, creates enduring risk for businesses.

“One of the lasting legacies of this war will be a structurally higher risk premium on tanker rates globally because the weaponisation of physical chokepoints is no longer a theoretical risk,” Daleep Singh, vice chair and chief global economist at asset management company PGIM, said during a panel.

“It’s now an active risk that’s going to stay with us.”

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The fallout could put about 2.2 million jobs around the world at risk in 2026, particularly in construction, retail and services, Allianz said.

“What was once dismissed as a ‘fat tail’ scenario in boardrooms has become a reality,” Oxford Institute for Energy Studies’ Bassam Fattouh and Ahmed Mehdi said in a joint comment.

“Initial hopes for a contained conflict have been replaced by the realisation that any reopening of the Strait of Hormuz will be neither swift nor straightforward.”

Aurélien Paradis, Middle East and Africa CEO at AU Group, said the Gulf’s export-driven model also leaves regional businesses exposed.

“If businesses internationally become more stressed from a cashflow perspective, the impact is also felt here through slower payments, weaker counterparties and a higher risk of non-payment from clients abroad, who will also face a decreased volume of sales,” Paradis said.