Brent crude is hovering near $120 a barrel. The Strait of Hormuz (the narrow chokepoint through which roughly 21% of the world’s petroleum passes) is effectively closed. Markets opened this week with the VIX above 30. Airlines are rerouting. Energy stocks are surging. And somewhere in a boardroom right now, a CFO is staring at a cost forecast that was written four months ago and no longer resembles reality.
This is not a hypothetical stress test. This is April 2026.
The question that separates businesses that endure this moment from the ones that bleed through it has nothing to do with hedging strategies or working capital ratios. It is simpler and harder than that: did you build a business where your customers stay even when your prices go up? Because if you did not, everything else is just a delay.
The Compounding Nature of the Current Crisis
What makes the present moment particularly unforgiving is that it is not a single shock. It is several shocks that arrived in sequence and are now operating simultaneously.
The war in Ukraine never ended. It continues to weigh on macroeconomic conditions across the Commonwealth of Independent States and through Europe, where EU growth is forecast at just 1.3% in 2026, down from 1.5% in 2025, as geopolitical uncertainty suppresses exports. The Middle East conflict escalated further. Now, with the Strait of Hormuz under threat, energy markets are pricing in a scenario that most supply chain models were not designed to contemplate.
Traditional economic logic is becoming less decisive, and geopolitics is gaining prominence. The question for businesses is no longer only which country achieves the highest growth or the lowest inflation, but which country holds the strongest cards and how willing it is to play them.
On top of the conflict layer sits the trade policy layer. The US tariff regime, the US-China standoff, the broader fragmentation of the rules-based global trade order — all of it is generating cost pressure that businesses are still absorbing in delayed waves. Global trade growth is projected to slow to 2.2% in 2026, as the temporary effect of front-loaded shipments fades and trade barriers and policy uncertainty persist.
In tariff-imposing economies, higher import costs are feeding directly into headline inflation, while targeted economies continue to experience demand-driven disinflation. The same global environment is producing two entirely different operating realities depending on where a business sits in the supply chain and which geographies it touches.
And inflation, though technically moderating on paper, has not translated into relief at the operating level. Even as headline inflation recedes, high and still-rising prices continue to erode the purchasing power of the most vulnerable, with food, energy, and housing costs remaining a persistent source of pressure. Customers are making harder choices. They are cutting where they can. And any business whose value proposition was always a little thin is now feeling the precise weight of that thinness.
The Divide That Has Been Widening Since 2022
None of this arrived without warning. The inflation cycle that began in 2021, i.e., supply chains rupturing, energy prices spiking after Russia’s invasion of Ukraine, central banks scrambling to catch up, was the first major sorting event. Businesses with genuine pricing power raised prices and held their margins. Businesses without it watched revenues grow on paper while profitability quietly collapsed underneath.
The 2021 to 2023 period provided the clearest real-world stress test in recent memory. Companies with genuine pricing power raised prices, sometimes multiple times, while maintaining or expanding gross margins. Those without it saw margins decline even as revenue grew, because the growth came from inflation rather than real volume or value improvement.
The businesses that came out of that cycle clearly were not simply well-managed. They had built something structurally different: a customer relationship where price was not the primary reason for staying. The companies in the second group spent three years telling themselves the pressure was temporary. For many of them, it was not.
Pavitra Walvekar, who spent more than a decade working under India’s most turbulent fintech years, has watched this pattern play out across the businesses he has built and backed. His framing is direct: “The businesses that struggle most during inflationary cycles are not the ones facing the highest cost increases. They are the ones that were never quite certain their customers were staying for the right reasons.”
What Pricing Power Looks Like Under Real Pressure
There is a version of pricing power that only exists in stable conditions. A business can look differentiated, charge a premium, and maintain healthy margins for years — as long as its customers are not under pressure themselves. The moment customers face their own cost squeeze, they start auditing every line item. That is when the real test begins.
The most direct evidence of genuine pricing power is the stability of gross margin during periods of rising input costs. When a company with pricing power raises prices in a bad environment, it maintains or expands margins. When one without it raises prices, it loses volume. When it does not raise prices, it loses margin. Either way, it loses.
The companies that have consistently demonstrated real pricing power tend to be quiet compounders rather than headline names, i.e., niche suppliers with structural positions in their categories, whose customers absorb their price increases because the cost of switching away is genuinely higher than the cost of staying.
That switching cost can take many forms. It can be technical integration. It can be accumulated institutional knowledge. It can be the depth of a relationship built over years of consistent delivery. What it cannot be is simply habit, or the friction of a mediocre alternative. Habit evaporates when budgets tighten. The Strait of Hormuz crisis has tightened budgets across every energy-sensitive business on the planet right now.
The Architecture Decision That Cannot Be Made in April 2026
Pavitra’s lens on this, shaped by years of evaluating lending and fintech businesses, cuts to the structural question: is the margin in this business a product of value delivered, or simply a product of competition that has not arrived yet? In financial services, pricing power lives in the depth of a borrower relationship, the irreplaceability of a platform’s integration, the kind of trust that makes a client unwilling to restart that process with someone newer and cheaper.
The critical insight is that this architecture cannot be designed in response to a crisis. It can only be discovered as either already built or not. “Margin defence is an architectural decision,” he has observed. “It gets made in the years before the crisis, not during it.”
The rules-based global order that underpinned international trade and investment for decades continues to erode. What 2026 will be defined by is the emergence of new rules — and the uncertainty of what those rules will look like. In that environment, the businesses that will compound are not those waiting for stability to return. Stability is not returning on any near-term timeline that any serious analyst is projecting. Key downside risks for the global economy include a re-evaluation of technology expectations and an escalation of geopolitical tensions — both of which are live and present today.
The Only Question Worth Asking Now
Pavitra applies a three-part filter when evaluating whether a business has structural pricing power or a well-maintained illusion of it. Can it raise its price in a bad year without a long internal debate about whether customers will leave? Would its most valuable customers experience genuine disruption if it disappeared tomorrow? And is the margin an expression of the value delivered, or a reflection of competition that simply has not arrived yet?
In April 2026, with oil above $120, inflation structurally stickier than the headline numbers suggest, and trade routes being literally rerouted around active conflict zones. These are not philosophical questions. They are the most operationally urgent questions a business owner can be sitting with.
The businesses that will emerge clearly from this period are not the ones making the smartest adjustments right now. They are the ones that made the right structural decisions years ago. Pricing power is not built in the middle of a shock. It is tested there. And what this moment is revealing, with unusual clarity, is which companies built real margin defence and which ones were living off borrowed calm.
Photo by Monstera Production from Pexels (Free for Commercial use)
Image published on November 10th, 2020
