Rising energy prices, supply‑chain disruption, and heightened cyber risk linked to the Iran war are putting upward pressure on IT costs - but not evenly. Hardware, cloud services, and cyber security are likely to see the biggest increases, with manufacturing‑led and always‑on businesses across Sheffield feeling the impact first. How long these pressures last will depend on how the conflict unfolds and how global markets respond.
The escalating conflict involving Iran is already creating economic shockwaves that UK businesses can’t ignore.
Much like the Russia invasion of Ukraine in 2022, the immediate effects are being felt through energy markets, global logistics, and cyber security. Brent crude has surged above $100 per barrel, European gas prices have jumped by around 50%, and analysts warn inflationary pressure is returning just as businesses were beginning to see some relief.
For SMEs in Sheffield and South Yorkshire in particular, where manufacturing, professional services, education, and logistics are prominent, these pressures matter more, because modern IT is deeply tied to energy, connectivity, and global supply chains.
This article explains where IT costs are most likely to rise, how quickly businesses may feel the impact, and what SMEs can do to prepare.
At the centre of the disruption is Iran’s influence over the Strait of Hormuz, a vital shipping route that carries roughly 20% of the world’s oil and liquefied natural gas. Even the threat of disruption has been enough to rattle markets.
Within days of the conflict escalating:
Energy acts as a base cost for almost every IT service, from powering data centres and telecoms networks to manufacturing and transporting hardware. As a result, even businesses with “fixed” IT contracts may see knock‑on effects as suppliers absorb higher operating costs.
The UK’s Office for Budget Responsibility has warned that sustained energy price increases linked to the conflict could add around 1% to UK inflation in 2026, potentially delaying interest‑rate cuts and increasing borrowing costs for businesses.
The 2022 Ukraine crisis offers a useful reference point.
Back then:
The current Iran conflict is not identical, and the UK is less directly exposed than it was to Russian gas. However, analysts expect a similar pattern, even if the scale is slightly smaller - unless the conflict widens or drags on.
Industry forecasts suggest:
Rather than affecting IT evenly, the conflict puts pressure on specific parts of the IT ecosystem - particularly those that rely on energy, physical logistics, or security resilience.
Rising fuel prices have an immediate impact on:
UK petrol and diesel prices rose 5–8p per litre in a single week after hostilities escalated.
At the same time, shipping disruption and higher insurance costs - alongside previously documented hardware price increases linked AI data centre growth - are pushing up prices for:
For South Yorkshire SMEs- many of which still rely on on‑premise infrastructure - this means hardware refreshes may become more expensive and slower, just as ageing equipment reaches end of life.
Cloud services are often seen as insulated from geopolitical events, but they are extremely energy‑intensive.
During the last energy crisis, Microsoft disclosed an additional $800 million in data‑centre energy costs
While cloud providers rarely raise prices overnight, sustained energy inflation tends to show up later through:
The conflict has also raised concerns about resilience, following reports of drone strikes affecting cloud facilities in the Middle East.
As a result, many organisations are increasing spend on:
All of which improve resilience - but at a higher running cost.
Cyber security is the area where the conflict creates the largest increase in risk, even if not always the fastest price rise.
Iran‑linked actors have already been connected to destructive cyber attacks on Western companies, including a major incident affecting medical technology firm StrykerSecurity analysts expect an increase in:
Historically, cyber security spending increases during geopolitical conflicts, even when other IT budgets tighten.
For SMEs, this often means:
In practical terms, the cost of doing nothing rises faster than the cost of improving security.
South Yorkshire SMEs are likely to see IT costs rise sooner than many other regions because of how local industries use technology and energy:
Many local manufacturers use on‑site servers, industrial PCs, production systems, and backup power. Rising energy prices increase the cost of running, cooling, and protecting this infrastructure - pushing IT costs up faster than in office‑only businesses.
Higher diesel prices feed directly into IT delivery: on‑site support, hardware transport, emergency replacements, and project work all become more expensive, with costs surfacing quickly and being hard to defer.
South Yorkshire has a strong base of advanced manufacturers connected to defence and national‑infrastructure supply chains. During geopolitical tension, these organisations, and their suppliers, typically face tighter cyber‑security requirements, more scrutiny, and higher resilience expectations, increasing IT spend earlier than average.
Accountants, legal firms, consultancies, and recruiters depend heavily on cloud platforms. As data‑centre energy costs rise, price pressure usually appears through reduced discounts or higher renewal costs rather than sudden increases, quietly lifting monthly IT spend.
These organisations must maintain high data availability and protection. Heightened geopolitical risk increases spending on backups, monitoring, and recovery, even where budgets are already constrained.
During international conflicts, threat actors often target smaller organisations perceived as less protected. This drives earlier investment in security tools, monitoring, and insurance, sometimes before other IT prices visibly rise.
In short: South Yorkshire’s mix of manufacturing, logistics, defence‑adjacent industry, education, and professional services means IT costs rise through energy, fuel, cloud pricing, and cyber security at the same time, causing pressure to appear earlier and feel sharper than in digital‑only regions.
South Yorkshire businesses may feel the impact earlier than many regions because:
In practical terms, local SMEs should expect:
The Iran war is already pushing up global energy prices, disrupting supply chains, and increasing cyber security risks - all of which feed directly into the cost of IT services.
For UK SMEs, and particularly those across Sheffield and South Yorkshire, the most immediate pressure will be felt in hardware, energy‑intensive services, and cyber security. While not every cost will rise overnight, the overall direction of travel in 2026 is upward.
The key lesson from recent history is not to panic — but to plan early, review contracts carefully, and invest where risk is rising fastest.
Businesses that take a proactive approach are far better placed to absorb short‑term cost pressures and avoid much larger disruption later.
This article was written by Alex Hodgson and Microsoft Copliot with final edit and sign off by Alex Hodgson.
Article research was undertaken by Microsoft Researcher based on a detailed prompt by Alex Hodgson and is based on publicly available reporting and industry analysis from sources including IDC, CNBC, The Independent, The Register, CBS News, and UK economic commentary as of March 2026. It focuses on likely economic and operational impacts, not political outcomes, and does not speculate beyond currently reported data.
Actual cost impacts will vary depending on conflict duration, market conditions, supplier contracts, and individual business circumstances.
Directly referenced articles: