A sudden increase in oil prices is never only an energy story.
It can raise transportation expenses, squeeze operating margins, unsettle bond markets and increase the cost of capital—all before the higher costs are fully visible in a company’s financial statements.
On July 20, Brent crude briefly reached $91.42 per barrel, its highest level since June 11, as renewed U.S.-Iran hostilities disrupted traffic through the Strait of Hormuz. Prices later pulled back as potential ceasefire discussions offered the market some hope. Reuters reported Brent at $88.28 and West Texas Intermediate at $82.15 during Monday trading.
The retreat matters—but it does not eliminate the risk.
For executives, property owners, investors and capital partners, the central question is no longer whether oil will fluctuate. It is whether their financing and cash-flow strategies can withstand another sustained increase.
Why the Strait of Hormuz matters to American businesses
It may be tempting to view trouble in the Strait of Hormuz as a distant geopolitical issue. The numbers tell a different story.
The U.S. Energy Information Administration estimates that 20.9 million barrels of oil per day moved through the strait during the first half of 2025. That represented approximately 20% of global petroleum-liquids consumption and one-quarter of maritime-traded oil. More than 20% of global liquefied-natural-gas trade also traveled through the route. EIA data shows that existing bypass pipelines could replace only part of those flows during a major disruption.
Tanker traffic has now fallen sharply. Only four vessels reportedly transited the strait on Sunday, down from eight the previous day.
The direct U.S. dependence on Persian Gulf crude is lower than it was decades ago, but American companies are not insulated from globally priced energy, refined-fuel shortages or increased transportation costs.
A disruption does not need to eliminate supply completely to affect a business. It only needs to make fuel, shipping and financing sufficiently more expensive.
The pressure has already reached consumers and businesses
The national average gasoline price crossed $4 per gallon on July 20, reaching $4.003, according to AAA data cited by Reuters. That represents an increase of more than 30% since hostilities escalated at the end of February.
For households, that means less disposable income.
For businesses, the effects can be broader:
- Transportation and delivery expenses rise.
- Contractors pay more to move crews, equipment and materials.
- Manufacturers face higher freight and input costs.
- Logistics companies experience greater weekly fuel requirements.
- Retailers may see customers reduce discretionary purchases.
- Property operators absorb higher maintenance and service charges.
- Government contractors may incur costs faster than reimbursements arrive.
The most dangerous period is often the gap between paying the increased expense and collecting the corresponding receivable.
A company can remain profitable on paper while experiencing a serious cash-flow shortage in practice.
Energy inflation can keep financing costs elevated
Higher fuel prices can also influence the cost of capital.
As oil and gas prices climbed on July 20, the U.S. 10-year Treasury yield reached approximately 4.55%, while the 30-year yield moved back above 5%. Futures markets began assigning greater probability to additional Federal Reserve tightening before year-end, according to Reuters’ global-markets report.
These movements matter because commercial financing does not exist separately from the bond market.
Treasury yields affect the benchmarks used to price many commercial mortgages and fixed-income investments. Inflation expectations influence lender return requirements. Economic uncertainty can also lead credit committees to require lower leverage, stronger coverage and more reserves.
If higher energy prices persist, borrowers could face two pressures simultaneously:
- Lower operating margins from increased business expenses.
- More demanding financing terms because of inflation and rate volatility.
Waiting for rates to decline may therefore be less reliable than strengthening the transaction so it can work under today’s conditions.
Businesses should stress-test cash flow now
A company does not need to predict the exact price of oil to prepare for volatility.
Management can model what happens if fuel, freight or energy-related costs remain 10%, 20% or 30% above the original budget. That analysis should answer several practical questions:
- Can the company pass higher costs to customers?
- How long does it take to implement price adjustments?
- Do customer contracts permit fuel surcharges?
- Will receivable balances increase as operating costs rise?
- How many days must the company fund payroll and expenses before collecting?
- Which customers are most likely to delay payment?
- How much unused liquidity remains available?
- Could higher expenses create a covenant or debt-service problem?
These are not only internal planning questions. They are the same issues sophisticated capital providers will examine when assessing a financing request.
A borrower that has already measured the exposure is easier to underwrite than one relying on the hope that energy prices will quickly normalize.
Accounts-receivable financing becomes more relevant
Rising costs frequently create a working-capital problem before they create an earnings problem.
Consider a transportation company that must purchase fuel every week but waits 30 to 60 days for customers to pay. As fuel prices rise, the company needs more cash to support the same amount of business.
A government contractor may face a similar problem when labor, equipment and transportation costs increase while agency payments remain on their existing schedule.
Accounts-receivable financing or invoice factoring can help convert qualified unpaid invoices into immediate working capital. This does not remove the underlying cost pressure, but it can shorten the cash-conversion cycle and reduce the strain created by delayed payments.
The strength of this structure depends heavily on the quality of the receivables. Businesses should maintain accurate aging reports, resolve billing disputes quickly and monitor customer concentration closely.
Commercial real estate sponsors need updated assumptions
Property investors should also revisit their underwriting.
Energy volatility can affect utilities, insurance, maintenance, construction materials and contractor pricing. Higher Treasury yields may also increase permanent-financing costs or reduce the proceeds available at refinance.
For an acquisition or development project, the updated analysis should include:
- Revised construction and transportation allowances
- Higher interest and carrying-cost reserves
- A realistic refinancing rate
- Conservative exit-cap-rate assumptions
- Adequate debt-service coverage
- Contingency funds for schedule or material-cost changes
- A backup exit if permanent financing becomes less favorable
A project that works only under the original interest-rate and construction budget is not adequately protected.
Investors should distinguish yield from protection
Periods of volatility can produce attractive private-credit opportunities. Borrowers may value speed, flexibility and certainty enough to accept higher pricing.
But higher yield alone does not make a sound investment.
Family offices and private investors should examine whether loan pricing adequately compensates for commodity exposure, margin compression and refinancing risk. Collateral quality, covenant protection, borrower liquidity and the lender’s ability to manage a workout become increasingly important when economic conditions are changing rapidly.
The right question is not simply, “What return is being offered?”
It is, “What protects the capital if operating conditions become more difficult?”
The Apex perspective: liquidity should be arranged before it becomes urgent
The market may calm if negotiations reduce tensions. It may also remain volatile if shipping restrictions continue.
Either outcome supports the same conclusion: businesses and property owners should arrange liquidity while they still have choices.
At Apex Commercial Funding, we help clients evaluate the full capital picture—not only the requested dollar amount. That includes the use of funds, cash-conversion cycle, collateral, repayment sources, operating risks and appropriate financing structure.
Depending on the situation, the solution may involve invoice factoring, accounts-receivable financing, asset-based lending, bridge capital, DSCR financing or another commercial structure.
The objective is not to borrow simply because markets are uncertain.
The objective is to avoid allowing a temporary cash-flow gap to control an otherwise viable business or investment.
Prepare before rising costs narrow your options
If higher fuel, material or financing expenses could affect your company or commercial real estate project, now is the time to stress-test your cash flow and review your capital options.
Contact James Fillmore II at James@apexcommercialfunding.com or 240-535-9291 for a confidential capital assessment.
Financing is subject to underwriting, due diligence, lender requirements and final approval. This article is for informational purposes and does not constitute an offer of credit, legal advice or investment advice.
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