Gulf crisis brings patchwork of opportunities and risks for SL businesses

• Shipping disruptions are creating immediate winners
• Energy distributors may also see a temporary lift in revenues
• As bulk of remittance inflows originate from Middle East, banks and diversified financial services are exposed to lower remittances, reduced fee income and heightened credit stress

Sri Lanka’s corporate sector faces a patchwork of opportunities and risks as the March 2026 conflict in Iran sends shockwaves through global energy markets, shipping routes and domestic financial flows, according to First Capital Research. 

The ripple effects are already reshaping the business dynamics, presenting short-term gains for some while testing resilience across the board. The shipping disruptions are creating immediate winners. The rerouted vessels increase traffic through the Port of Colombo, boosting demand for marine fuel and port services. The freight rates and insurance premiums are climbing along longer transit corridors, providing the logistics operators a chance to expand margins in the near to medium term. The companies with diversified portfolios in this space, such as John Keells Holdings PLC and Hayleys PLC, are particularly well-positioned to benefit from these shifts.

The energy distributors may also see a temporary lift in revenues. With the global crude prices trending higher, the firms holding surplus stocks—including Lanka IOC PLC and Laugfs Gas PLC—could capitalise on the 

rising demand. 

However, these gains are tempered by the broader macroeconomic pressures, including inflation and cost-of-living shocks that ripple through both households and businesses.

Tourism presents a nuanced picture. While Sri Lanka could attract the travellers seeking to avoid the conflict zones, the inbound arrivals from Europe may experience short-term disruptions, due to the altered flight paths and reduced connectivity through the Middle Eastern hubs. This makes the recovery gains in the sector fragile and dependent on how long the crisis persists.

The financial sector is not insulated from the fallout, given that more than half of the country’s remittance inflows originate from the Middle East. This leaves the banks and diversified financial services exposed to lower remittances, reduced fee income and heightened credit stress. The leasing and finance companies, in particular, may face the rising non-performing loans, as the household cash flows tighten.

The consumer-focused businesses and exporters are feeling pressure too, as the rising energy costs and inflation are likely to compress the household disposable income, dampening the spending and earnings visibility. 

The plantation companies face a declining demand in the critical export markets such as the UAE, Iran, Iraq and Saudi Arabia, which together account for roughly 15-20 percent of the Ceylon Tea exports, threatening both revenue and profit margins.

First Capital Research observes that while sectors like bunkering, logistics and energy could see short-term gains from the rerouted trade and elevated prices, the overarching economic narrative is one of caution. The inflationary pressures, potential declines in remittances and heightened uncertainty in global markets are poised to challenge corporate earnings, investor sentiment and overall market stability in the months ahead.