The Impact of the Middle East Geopolitical Instability and the Oil Crisis on the Resilience and Development Potential of the Small and Medium-Sized Enterprises (SMEs) Sector in the Republic of Serbia

Abstract

The paper explores the processes through which the escalation of conflict in the Middle East and the resulting blockade of the Strait of Hormuz have affected the stability, operations, liquidity, and investment readiness of the small and medium-sized enterprise (SME) sector in Serbia, under conditions of energy uncertainty. The diesel prices rise has caused an average reduction in net profit margins in the transport and agro-processing sectors. The crisis shows reduced resilience of companies dependent on fossil fuels, unlike those that have initiated the green transition. Research indicates a strong negative correlation between the rise in Brent crude oil prices and the industrial production of the SME sector. It has been identified that companies that have implemented energy efficiency measures and digitalized logistics demonstrate a higher level of resilience to crises. The results suggest that the crisis acts as a compulsion, accelerating the green transition, despite restrictive financing conditions. The paper concludes with strategic recommendations, emphasizing the necessity of establishing a National Fund for the Energy Resilience of SMEs and targeted subsidies for the implementation of renewable energy sources as a mechanism of defence against future geopolitical and geoeconomic crises. The authors propose redefining economic policy towards direct subsidies for the energy autonomy of SMEs, instead of the current measures of controlling derivatives prices, in order to preserve the long-term developmental potential of the economy.