Oil at $96 a Barrel: What It Means for Your Business Acquisition

I underwrote my first commercial loan when oil was $18 a barrel. That was 1998. Last month, Brent crude touched $118. As I write this on April 13th, WTI has pulled back to around $96 after ceasefire talks, but diesel is still above $5.80 a gallon and the national gas average is $4.06. If you are in the middle of acquiring a business, these numbers are not background noise. They are changing your deal math right now.

The question I have been getting from buyers every week since March: "Should I wait until oil prices come down?" The answer depends on your specific deal. But the analysis is more nuanced than most people realize, and almost nobody is walking buyers through the actual mechanics of how energy prices affect acquisition financing. That is what this post is for.

On February 28th, military action in the Middle East led to the de facto closure of the Strait of Hormuz. For context, roughly 25% of the world's seaborne oil trade passes through that waterway. When it closed, nine countries collectively shut off over 9 million barrels per day of crude production by April. Brent crude went from $61 per barrel at the start of the year to $118 in late March before pulling back.

The EIA forecasts gasoline will average $4.30 per gallon in April, with diesel peaking above $5.80. The Dallas Fed published a working paper in April 2026 estimating that if the Hormuz disruption lasts just one quarter, the average WTI price holds near $110. If it extends further, some Wall Street analysts are modeling $150 to $200 scenarios.

Here is where it gets practical. If you are acquiring a business, the first thing I look at is how energy prices affect that company's operating cost structure. Not every business is affected equally. A software company with remote employees feels almost nothing - unless all of their customers are in logistics. A logistics company, a restaurant chain, a manufacturing operation, or a landscaping business? Those are getting squeezed right now.

Diesel is the one to watch. It was $3.80 a gallon a year ago. It is $5.80 today. That is a 53% increase. For any business where transportation, delivery, or fleet operations are a material cost, that 53% increase in fuel costs flows directly into reduced cash flow. And reduced cash flow means a lower debt service coverage ratio.

Notice something interesting in that table. SBA rates actually came down. The prime rate dropped from 7.50% to 6.75% since last year, which brought the SBA 7(a) max rate from 10.25% down to 9.50%. So your borrowing cost is lower, but your target company's operating costs may be significantly higher. Those two forces are pulling in opposite directions, and which one wins depends on the specific business you are buying.

Let me walk through a real scenario. Say you are acquiring a regional distribution company for $2 million with an SBA 7(a) loan. The business did $400,000 in SDE last year. With a 10% equity injection ($200,000 down) and an SBA loan of $1.8 million at 9.50% over 10 years, your annual debt service is approximately $279,000.

Last year's DSCR: $400,000 / $279,000 = 1.43x. That clears most SBA lender thresholds comfortably.

But this company runs 12 trucks. Fuel was 8% of revenue last year. Revenue was $3.2 million, so fuel cost was $256,000. If diesel is up 53%, fuel cost becomes $391,000. That is $135,000 in additional operating expense that comes straight out of cash flow.

Adjusted SDE: $400,000 minus $135,000 = $265,000. This assumes you cannot pass through this cost to your customers. Depending on how your contracts are set up and what type of business you offer, you might be able to pass this cost on. But if you must increase costs to cover this expense, you risk losing sales. New DSCR: $265,000 / $279,000 = 0.95x.

That deal went from comfortably financeable to dead on arrival. Not because the business is bad. Not because the buyer is unqualified. Because the energy cost structure shifted beneath the deal while the numbers on the listing still reflected last year's fuel prices.

Not every acquisition is equally affected. I am going to be specific because vague warnings are useless. Here is how I am categorizing deal risk based on energy exposure right now:

I am not going to tell you to wait. I am also not going to tell you to rush. What I am going to do is tell you exactly what the buyers who are still getting deals financed in this environment are doing differently.

Here is what I find interesting. In every market disruption I have worked through over roughly 30 years, the best buyers are the ones who stayed in the market when others pulled back. The Y2K recession, 9/11, the Iraq War, the 2008 financial crisis. The 2020 pandemic. Both created windows where competition for good businesses dropped, sellers became more flexible on terms, and the buyers who moved got better deals.

We are seeing early signs of that pattern now. Our deal pipeline at CLX shows a 15% increase in seller inquiries since March. Some of those sellers are motivated by the same fear that is causing buyers to pause. That creates negotiating leverage for well prepared buyers who can demonstrate financing readiness.

Secondarily, the rate environment is working in your favor. A year ago, the SBA 7(a) max rate was 10.25%. Today it is 9.50%. On a $2 million loan over 10 years, that 0.75% rate reduction saves roughly $10,000 per year in debt service. That partially offsets the fuel cost increase for moderate-exposure businesses.

I want to be transparent about my position. CLX earns a success fee when deals close. I have a financial incentive to encourage you to move forward. I am naming that incentive so you can weigh my advice accordingly.

With that said, here is what I am actually telling clients this week:

First, if your target business has fuel costs above 10% of revenue, you need to renegotiate or walk - unless those costs are being passed directly onto the clients. The math does not support paying 2024 multiples on a business whose 2026 cash flow is materially impaired by energy costs. That is not a market call. It is arithmetic.

Secondarily, if your target is a low-exposure business, this is a good time to be buying. Rates are lower than last year. Seller motivation is increasing. Competition from other buyers has softened. The SBA program is functioning normally and lender appetite for clean deals remains strong.

Lastly, do not try to time the oil market. I have been in commercial lending for roughly 30 years and I have never once seen a borrower successfully time a commodity cycle. Structure your deal so it works at current energy prices. If prices drop, your deal gets better. If they stay elevated, your deal still works. That is how you build a resilient acquisition.

Oil at $96 a barrel is not a reason to stop acquiring businesses. It is a reason to acquire businesses more carefully. The buyers who will do well in this environment are the ones who understand their target's energy exposure, rebuild the pro forma with current costs, and work with a financing partner who knows how to structure around temporary margin compression.

The buyers who will struggle are the ones who rely on last year's numbers, refuse to renegotiate price, and submit loan applications with DSCR projections that do not account for the cost environment we are actually in.

If you have a deal in progress or a target under LOI and you want to know how the current energy environment affects your financing, I am happy to look at the specifics. That conversation costs nothing.