Concerns are growing within the construction sector as rising oil prices linked to the ongoing conflict involving the United States, Israel and Iran threaten to increase the cost of building materials and transportation.
Andrew Brownlee, chief executive of the Construction Industry Federation (CIF), said the situation is being closely watched by companies across the industry. Speaking on RTÉ’s Morning Ireland, Brownlee warned that prolonged instability in global shipping routes could significantly affect construction costs.
“We are a small island economy, so a big component of all our material costs are transportation and logistics,” Brownlee said. He noted that sudden energy price increases, like those seen over the past week, can quickly push up expenses throughout the construction supply chain.
According to Brownlee, many essential construction materials depend heavily on energy during production and delivery. “When you think about construction concrete, cement, steel, and how those materials are made, they really are dependent on fuel, and fuel is the core driver of costs,” he said.
The conflict in the Middle East has already caused volatility in global oil markets, raising concerns that further disruptions could affect international shipping routes. For countries that rely heavily on imported building materials, higher fuel prices can translate into increased project costs and delivery delays.
Ireland’s construction sector already faces relatively high costs compared with other European cities. A government cost comparison conducted in 2023 found that building costs in Dublin were higher than in several comparable cities across Europe, including Copenhagen, Birmingham and Berlin.
Brownlee said it remains unclear whether the latest rise in oil prices will have a lasting impact on smaller construction projects or the availability of materials. “It’s too early to tell,” he said, noting that the situation could change depending on how long the geopolitical tensions continue.
However, he warned that a prolonged period of high energy prices and disrupted shipping routes could place additional pressure on builders and developers, many of whom are already dealing with supply chain challenges and rising costs.
Brownlee also expressed hope that the conflict would be resolved quickly, bringing greater stability to global markets and reducing economic uncertainty.
If the crisis continues for an extended period, the Construction Industry Federation may seek support measures from the government to help the sector manage the financial strain, he said.
The Irish government has already introduced measures aimed at supporting housing development. In the most recent national budget, the state reduced the value-added tax (VAT) rate on the sale of completed apartments from 13.5 percent to 9 percent.
That reduced rate is scheduled to remain in place until the end of 2030, with the aim of encouraging more housing construction and easing pressure on the property market.
Industry representatives say developments in global energy markets will continue to be closely monitored, as fuel costs remain a key factor shaping construction prices.
