The World watches the Strait of Hormuz: what does the four-month war in the Middle East mean for Lithuanian industry?

The four-month conflict in the Middle East has once again demonstrated the profound impact of geopolitical events on the global economy. One of its key epicenters is the Strait of Hormuz – a strategic logistics corridor that dictates energy prices and the stability of supply chains. However, the greatest challenge for businesses today is not the price of energy resources themselves, but market uncertainty.

“Businesses can adapt to more expensive raw materials or adjusted transport tariffs, but making long-term expansion decisions becomes difficult when there is a lack of clarity about the future. Today, the biggest challenge to industrial growth is not the price level itself, but macroeconomic uncertainty,” says Ingrida Grikpėdienė, CEO of VMG Wood Invest.

The Lithuanian economy is tightly integrated into European manufacturing chains, meaning that slowed consumption and reduced investment in key export markets directly affect the country’s industry as well. Nonetheless, the energy security situation today is significantly more stable than it was a few years ago – supply reliability is ensured by diversified energy sources and the growing energy independence of enterprises.

In the furniture and wood sector, geopolitical tensions are already reflected in rising raw material prices and more cautious customer behavior. As consumers postpone home renovations or new furniture purchases, orders are decreasing across the entire supply chain. Due to intense competition, manufacturers cannot always pass these increased costs on to the final consumer.

“We are observing this trend in practice as well – the volume of orders planned for the summer period across VMG Wood Invest group companies is currently 5–7% lower than forecasted at the beginning of the year. On the other hand, we see more positive signs for the autumn season – customer activity allows us to expect a stronger second half of the year,” states I. Grikpėdienė.

According to her, Lithuanian industry today is much more resilient than it was five years ago – investments in automation, energy efficiency, and supply chain diversification allow for more effective risk management. Nevertheless, in the long term, the most critical factor remains a stable and predictable geopolitical environment, which drives investment, consumption, and manufacturing order growth not just for the next month, but for the coming years.