On 28 February 2026, the United States and Israel launched coordinated military strikes against Iran. Thirteen days in, the conflict has killed over 1,300 Iranian civilians, displaced more than three million people, shut the Strait of Hormuz to commercial shipping, and triggered the largest disruption to global energy supply since the 1990 Gulf War. Brent crude has surged from roughly $70 per barrel to above $110. European natural gas benchmarks are up 75%.
If you run a private equity portfolio, this is not background noise. It is a live stress event touching energy costs, supply chains, digital infrastructure, cybersecurity exposure, deal pipeline velocity, and exit timing. The question is not whether your portfolio is affected. It is whether you know how it is affected, and whether you are acting on that knowledge now or waiting for next quarter’s board pack to tell you.
This article outlines the five stress-testing areas that, in our view, every PE investor should be working through with their portfolio company management teams in the next 30 days.
1. Energy Cost Exposure and Margin Compression
The immediate transmission mechanism is energy. The Strait of Hormuz carries approximately 20% of global seaborne oil and a fifth of global LNG shipments. Its effective closure has forced major Gulf producers to suspend or curtail production, removing an estimated 6.7 million barrels per day from the market. With Brent already up more than 50% from pre-conflict levels, the effects on input costs are not marginal.
What to stress-test: For every portfolio company, quantify the direct energy cost as a percentage of revenue and COGS. Identify which businesses have fuel surcharge pass-through mechanisms in their contracts and which absorb cost increases. Companies in logistics, manufacturing, chemicals, packaging and food processing are most immediately exposed. Model the margin impact at $100, $120 and $130 per barrel and determine at what price point the business model breaks.
2. Supply Chain and Shipping Disruption
More than 80% of global trade moves by sea, and the Strait of Hormuz is one of the world’s most critical chokepoints. Over 150 vessels are currently stranded around the strait. Houthi militants have resumed attacks on shipping in the Red Sea, meaning both major maritime corridors connecting Europe, Asia and the Middle East are now in active conflict zones simultaneously.
The cascading effects reach sectors that may seem far removed from the Middle East: the region supplies roughly 21% of US unwrought aluminium imports, 40% of global helium critical for semiconductor manufacturing, and significant volumes of ammonia and nitrogen-based fertilisers.
What to stress-test: Map every portfolio company’s Tier 1 and Tier 2 supplier base for exposure to Gulf shipping routes. Identify any single-source dependencies on materials transiting the Strait of Hormuz or Red Sea. For companies with Asian manufacturing partners, assess whether their supply chains rely on petrochemical feedstocks sourced from the Gulf. Build a 90-day contingency plan for the most critical inputs.
3. TMT and Digital Infrastructure Risk
This conflict has introduced an entirely new category of risk for technology investors. Iranian drone strikes physically damaged three AWS data centres in the UAE and Bahrain, causing service outages across banking, payments, delivery platforms and enterprise software in the region.
Prior to this conflict, the Gulf was on track to become a major global hub for AI infrastructure, with over $300 billion in planned investments. That premise is now in question. Equally critical: 17 submarine cables pass through the Red Sea, carrying the majority of data traffic between Europe, Asia and Africa.
What to stress-test: For any portfolio company with cloud infrastructure hosted in the Gulf, verify disaster recovery and multi-region replication arrangements. If any portfolio company provides SaaS products to customers in the region, model the revenue impact of sustained outages. For TMT-focused funds evaluating AI infrastructure or data centre investments, reassess geopolitical risk assumptions in your underwriting.
4. Cybersecurity Exposure
State-sponsored cyber threats have escalated materially. Fitch Ratings has warned that hacktivists, state-sponsored groups and lone-wolf actors could target critical infrastructure and public entities. Google’s Threat Intelligence Group has identified a state-backed actor that had prepositioned itself on multiple US networks in the weeks leading up to the strikes.
The risk is compounded by the fact that CISA, the US government’s primary cyberdefence agency, is reportedly operating at approximately 38% staffing due to funding constraints.
What to stress-test: Conduct an immediate review of cybersecurity posture across every portfolio company. Prioritise businesses in critical infrastructure, financial services, healthcare and government contracting. Ask management teams: Do you have a tested incident response plan? Are OT systems segmented from IT networks? What is your 14-day business continuity plan if primary systems go down? If management cannot answer these with specifics, you have a problem that predates this conflict.
5. Deal Pipeline, Valuations and Exit Timing
The M&A environment has been disrupted. Technology M&A has slowed notably, increased volatility makes it harder for buyers and sellers to agree on valuations, and the IPO window has tightened further.
On the other side of the ledger, acquirers with strong balance sheets are already repositioning. Defence and cybersecurity assets are repricing upward. Infrastructure — particularly energy infrastructure, LNG terminals and grid assets — is seeing structurally higher valuations as energy security becomes a political imperative.
What to stress-test: Reassess exit timelines for every portfolio company in preparation. Companies with energy exposure will trade at a discount to pre-conflict expectations; companies with defence, cybersecurity or infrastructure exposure may trade at a premium. For assets in the hold portfolio, extend your working capital models by 90 days and stress-test covenant headroom against the inflation and revenue scenarios your lenders are running.
The Practitioner’s View
Geopolitical shocks do not create new problems in a portfolio. They accelerate and expose existing ones. The PE firms that navigate this well will be the ones that already had rigorous operational monitoring in place and are now simply applying it with greater urgency. The firms that struggle will be the ones discovering their blind spots in real time.
The five areas outlined above are not exhaustive, but they are the ones where the cost of delayed action is highest. If your investment directors and portfolio operations teams are not already working through these with management, the best time to start was two weeks ago. The second-best time is today.
Aethon Ventures provides management consulting to PE/VC funds, mid-market businesses and corporate development teams across Growth, Profitability, M&A and Transformation. London-based with consulting partnerships in India and Malaysia.
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