Authored by George Vessey, FX and Macro Strategist, Convera
Most founders don’t think of themselves as exposed to a shipping story out of the Middle East. But if your business pays contractors abroad, runs infrastructure billed in dollars or takes payment from customers overseas, this one is worth five minutes of attention.
Recent talks of an Iran-Oman deal to reopen the Strait of Hormuz have already moved oil prices and, through them, currency markets, though the situation shifts daily and could easily have moved on again by the time you read this. Around a fifth of the world’s oil passes through that stretch of water, so any credible move toward reopening it changes the calculus fast, and that calculus flows straight through into what your business pays for imports, contractors, and cloud infrastructure priced in dollars.
Lower oil prices are supportive of energy-importing economies, such as the UK, as they improve terms of trade, reduce imported inflation pressures and support consumer spending power. A firmer pound and softer oil-driven inflation tend to move together, which is a friendlier backdrop for a UK team paying US suppliers or cloud vendors.
It’s not resolved yet, though. Investors are unlikely to fully embrace the optimistic narrative just yet. Fresh threats to regional shipping from Yemen’s Houthi militants highlight that geopolitical risks remain elevated, meaning markets will want to see tangible improvements in security conditions before fully pricing out supply disruption risks. Don’t build a budget around this being fixed. Build a process that can handle it either way.
That’s the part that tends to catch growing tech businesses out. A five-person finance function juggling contractor payments in three currencies, AWS or GCP bills in dollars and customer receipts in euros doesn’t usually have the bandwidth to watch oil markets for early warning signs. Most are still managing this manually: checking a rate on Google before a payment run, absorbing whatever the number is that day, and hoping it evens out over the quarter. It rarely does.
There are a few practical fixes that don’t require a finance team to become currency analysts. A forward contract locks in a rate for a payment due in one, three or six months, so a known AWS or Oracle bill in dollars stops being a moving target on the P&L. Holding a multi-currency account means a business can receive euros or dollars from customers and pay suppliers in the same currency, rather than converting twice and absorbing the spread each time. Setting simple rate alerts, or agreeing a threshold beyond which someone reviews exposure, turns a background risk into something that gets checked rather than discovered.
The businesses that come through periods like this with less noise tend to be the ones that have already put this kind of infrastructure in place, rather than relying on someone remembering to check a rate before a payment run. None of that requires predicting where oil or the dollar goes next. It just means the volatility becomes a background risk you’ve priced for, rather than a surprise on your P&L.
The Hormuz story might resolve quietly, or it might not. Either way, for any founder paying or getting paid across borders, it’s a useful nudge to check whether your business is actually set up to absorb this kind of thing, or just hoping it doesn’t happen at a bad time.
