Why an Open Strait of Hormuz Won’t Save Your 2026 Margins

Here is why this does not resolve quickly.

A lot of people are watching the news and waiting for a diplomatic breakthrough. And while a ceasefire was announced in April, traffic through the Strait has not recovered. As of May 2026, ship transits through the Strait are still a fraction of pre-war levels.

This is not a light switch. Closing a major global shipping route does not mean opening it back up and returning to normal within a week. There are mines to clear. Insurance underwriters need to reassess risk. Shipping companies that have rerouted around the Cape of Good Hope have contracts and logistics chains built around those new routes.

KPMG South Africa's lead economist Frank Blackmore was clear: if this conflict runs for another nine to twelve months, the cost pressure will work its way through the entire economy - higher freight, higher food, higher everything. Before the war, the Reserve Bank was forecasting inflation close to 3%. Fuel costs have now added more than a percentage point to that number. There is real pressure building for a rate hike at the 28 May Monetary Policy Committee meeting.

That matters to your business. An interest rate increase means the cost of your dollar payments goes up again - because a rate hike strengthens the dollar and weakens the rand at exactly the same time as oil prices are already elevated.

You are already paying for last month's fear.

Here is something most people don’t consider: the fuel hitting South African pumps today was purchased weeks ago, at the height of the conflict's price surge.

Your logistics providers, your freight forwarders, your local distributors - they are all currently sitting on stock and contracts priced at the peak. They cannot drop their rates the moment the news turns positive without absorbing the loss themselves.

So even if oil falls tomorrow, what you pay next month is already locked in somewhere upstream. You are not paying for today's market. You are paying for last quarter's volatility.

What this means if you import.

Your costs have three pressure points right now, and they are all moving in the wrong direction at the same time.

First, the goods you import likely cost more to manufacture at source. Higher energy costs flow through every factory floor in the world. If your supplier is running machines on diesel or paying higher electricity bills, that cost ends up in your invoice.

Second, shipping is more expensive. Vessels rerouting around the Cape of Good Hope add weeks to transit times and fuel consumption. That shows up in your freight quote.

Third, you are paying for everything in US dollars - which is strengthening as global investors move money into dollars when uncertainty rises. The rand is under pressure from both the oil price shock and the stronger dollar at the same time.

The combination is not kind to import margins.

What this means if you export.

If you sell into global markets, your goods are priced in dollars. The weaker rand means your dollar revenues translate into more rands when you bring them home - which looks like a win on paper. But your input costs, particularly anything that runs on diesel or depends on fuel for logistics and distribution, are going up. The rand benefit on revenue can be eaten quickly by rising costs on the production side.

If you have a dollar payment coming in that you have not yet converted, now is the time to think about whether you lock that in - or wait and hope the rand does not strengthen before you convert.

Forward cover is simple. You book today's exchange rate for a payment you are making or receiving in the future. Whatever the rand does between now and then - your number stays fixed.

In a normal, stable environment, forward cover is a sensible precaution. In an environment where a rate hike, a rand move, and elevated oil prices could all hit your business at the same time, it stops being a precaution and starts being a necessity.

We cannot tell you exactly where the rand will be in three months. Nobody can. What we can tell you is that every condition that would weaken the rand further is already in play - investors pulling out of emerging markets, elevated oil prices, and real pressure on the Reserve Bank to hike rates.

Locking in your rate for upcoming payments takes the variable out of the equation.

The one thing to do this week.

Look at your payment schedule for the next three to six months. Any dollar payments going out - to overseas suppliers, for freight, for software licenses, for royalties - are sitting in an environment where the rand is under pressure, oil is elevated, and a rate hike on 28 May could push costs higher still.

Forward cover takes ten minutes to arrange. You agree on a rate today for a payment going out next month, or the month after. Whatever happens between now and then - your number does not move.

Stop waiting for a resolution to fix your margins. The businesses that come out of this cycle in better shape are not the ones with the best crystal ball. They are the ones who stopped leaving their exchange rate to chance.

You cannot control oil prices. You cannot control the Rand. You can control what rate you pay on the payments you already know are coming.