Consumers are seeing some relief at fuel pumps as oil prices fall following a fragile peace agreement in the Middle East, yet economists warn that the impact of months of disruption to global energy supplies will continue to affect households well into the coming year.
Oil prices, which began 2026 at around $60 per barrel, surged to a peak of $118 in late March amid conflict and disruption linked to the Strait of Hormuz, a critical global shipping route. Since mid-May, prices have gradually eased, and following recent diplomatic progress, crude is now trading at roughly $80 per barrel.
The decline is expected to eventually translate into lower petrol and diesel prices, although analysts say the benefit will not be immediate. Fuel industry representatives in Ireland note that damage to energy infrastructure during the crisis has affected up to 5% of refinery capacity, while global shipping delays continue to slow supply normalisation. Tankers bound for Europe typically take around 50 days to arrive even after routes reopen fully.
In Ireland, the Government’s temporary excise cuts introduced in March—reducing petrol by 15 cent per litre, diesel by 20 cent, and agricultural diesel by 3 cent—are due to expire at the end of July. Ministers are expected to decide within weeks whether to extend them, with Tánaiste and Minister for Finance Simon Harris indicating that ongoing energy disruptions will factor into the decision.
Household energy costs, however, remain under pressure. Several suppliers including Flogas, Electric Ireland, PrePay Power and Yuno Energy have recently announced price increases of between 8% and 10.9% for electricity, and up to 11.8% for gas. These rises are expected to place additional strain on households during the colder months when consumption increases.
Attention is also turning to Budget measures due in the autumn. The Government may face pressure to reintroduce electricity credits, although previous schemes cost the State hundreds of millions of euro and were paid equally to all households, regardless of income. Economic advisers have suggested more targeted supports, but political considerations around middle-income households may complicate reform.
Inflation remains a key concern. The Central Bank has warned that rising energy and food costs are already eroding household incomes. While wages have increased by around 4% annually, real gains are expected to be closer to 0.5% once inflation is taken into account. Inflation is forecast to average 3.5% this year, with a possible rise to 5% in a worse energy scenario.
Food prices are also expected to climb further as higher fertiliser and production costs filter through to supermarket shelves.
Despite easing oil markets, economists say the wider lesson of recent volatility is clear: global dependence on fossil fuels continues to leave economies exposed to geopolitical shocks, with lasting consequences for consumers.
